Knesset decides local property owners will help finance Metro

Tel Aviv light rail Photo: Eyal Izhar

Property owners within 800 meters of Metro stations will pay a 75% tax on the increased value of their real estate, according to the Knesset bill set to pass.

The Metro Network Bill was approved today for its second and third Knesset readings by the Special Knesset Committee on National Infrastructure Ventures. According to the Bill, property owners living near the Metro lines will pay high taxes and levies on 75% betterment of their properties, so that the most expensive infrastructure project ever built in Israel can be financed.

According to the clauses of the law, the Tel Aviv Metropolitan Metro underground railway system, which is due to begin operating in just over a decade, will cost about NIS 150 billion. The cost is expected to rise and the Ministry of Transport says it expects the amount to climb to NIS 200 billion, while Minister of Finance Avigdor Liberman has speculated that the cost could eventually reach NIS 250 billion, half of Israel's annual budget.

The government has decided that 50% of funding won't come from directly the national budget but from the Metro Tax, betterment levies and the planned congestion charge. The dispute between the Ministry of Finance and municipalities was resolved today with the understanding that the Ministry of Finance will receive a 35% Metro betterment tax, compared with the usual 25% betterment tax, and a 40% betterment levy will be paid to the municipalities.

For example an apartment owner whose home rises NIS 1 million in value after the Metro is built will pay NIS 350,000 to the Israel Tax Authority and another NIS 400,000 to the municipality. The rationale behind this high tax rate is the generous building and betterment rights that will be granted near to Metro lines.

"Enhanced" properties will be defined as any property within 800 meters of a Metro station. The stations are planned to be two kilometers apart, meaning that most properties on any given line - there will be three lines and 109 stations - will be liable for the tax. Arguably a home 800 meters from a station won't see its value particularly impacted by the line.

Along the Metro lines, urban renewal projects will be planned with the local authorities empowered to decide on the rise in value of the projects.

Published by Globes, Israel business news - en.globes.co.il - on October 18, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.

Tel Aviv light rail Photo: Eyal Izhar
Tel Aviv light rail Photo: Eyal Izhar
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