Original Thinking: Don’t blame overseas property owners for the failings of the Israeli government

"The Knesset Finance Committee has approved doubling property taxes on Israeli properties owned by foreigners."

By BARRY SHAW
An accountant calculator taxes 370 (photo credit: Ivan Alvarado / Reuters)
An accountant calculator taxes 370
(photo credit: Ivan Alvarado / Reuters)
The Knesset Finance Committee has approved doubling property taxes on Israeli properties owned by foreigners. It is a governmental step that ostensibly punishes overseas Jews who have the gall to buy luxury vacation homes in Israel.
Actually, it is a political gimmick to detract attention for the appalling decades-old failure of government housing policies by focusing the spotlight on fellow Jews who decided to invest their money in Israel rather than taking their families on vacations to Florida, the South of France, or Spain.
Finance Minister Yair Lapid praised the tax approval, claiming it would help solve the domestic housing crisis. He is wrong and short-sighted.
Jews with a passionate love of Israel are being treated by our politicians as if they are the evil owners of “ghost apartments.” The very image depicts sinister money-grabbers rather than appreciation for those who have invested much of their hard-earned money into Israel.
These individuals would certainly be able to buy similar properties in Europe and America at far lower prices and not be burdened with the already high taxes, including municipal taxes (arnona), which will increase further as a penalty to force them to sell their property and flee our shores. How can Interior Minister Gideon Sa’ar possibly imagine that wealthy overseas owners who bought their expensive vacation properties in prime Israeli locations, upgraded them to levels not seen in the average Israeli home, and use them for their much needed R&R, would make them available for long-term rent to “young residents who otherwise cannot afford presently cost-prohibitive rents” according to Daniel K. Eisenbud’s article (“Finance Committee approves doubling property taxes,” Jerusalem Post, 10/12/13). The concept is ridiculous.
Champion of this misguided cause appears to be Ofer Berkowitz, Jerusalem’s deputy mayor, from the Hitorerut (“awakening”) list. He should rename his party “Jerusalem Dreaming in Technicolor.”
He said, “Expensive housing impairs the ability of young people to stay in Jerusalem.” How does a NIS 3 million property owned by a London or New York family prevent a young couple with a budget, including mortgage, of NIS 1.5m. from getting into the local property market? Does Berkowitz really think that this property would sell to the young people he is trying to help at the price they can afford, even if he succeeds in forcing the overseas Jews to sell? It’s absurd. May I remind Berkowitz, and other mayors of towns with a proportion of vacation homes, that they charge excessive arnona in locations where overseas owners have their vacation properties. As such, the overseas owners contribute far more than the average population in their towns and cities while being less of a cost burden on the municipal social welfare, educational, and other resources and services.
It is not the investment of overseas property buyers in vacation homes that is at the heart of the domestic housing market defect. It is the failed policies of Israeli governments, and punishing our overseas friends and relatives is not going to correct that failure.
Governments have not succeeded in cutting the Gordian knot of bureaucratic mismanagement. They have not made good on their promise to release large plots of state land for development of affordable housing. Neither have they developed a plan for the construction of rental properties. They have failed to order the construction of apartments pegged to a price that is within the financial reach of the population.
Another government remedy would be to reduce the growing cost of consumer goods and food prices.
In 2004, Israeli food prices were 10% below the OECD average. If the government would regulate food prices it would allow young people to have that extra money to get into the housing market.
Our politicians should not play a false narrative by pointing envious fingers of blame at our overseas friends and make them feel guilty for the poor state of Israelis’ property crisis. Instead, they should address the shortcomings and solve the problem with the tools at their disposal that does not punish and drive away our wealthy friends from abroad.
The writer is the author of Israel Reclaiming the Narrative. www.israelnarrative.com.  He is also the co-owner of Netanya Real Estate. www.netanyarealestate.com