Overcharges to businesses for payment in local property taxes over the past five years by the Tel Aviv municipality has cost the sector NIS 170 million, according to initial estimates by the Federation of Israeli Chambers of Commerce.
"Local property taxes represent one of the heaviest burdens imposed on businesses and in many cases, the tax charged has an impact on the survival of businesses," said Uriel Lynn, president of the FICC. "We will be actively involved in demanding financial reimbursement for the surcharges in municipality taxes collected by the Tel Aviv municipality."
The Tel Aviv Court for Administrative Affairs ruled last week that the Tel Aviv municipality overcharged commercial property owners by some 8 percent in local property taxes from 2001.
The municipality replied that "enormous sums" were involved, which it could not refund "without causing an immeasurable deficit."
Indeed, many property owners who were overcharged will not get a refund because the Tel Aviv municipality alleged that the claims for the overpaid taxes were filed late or not at all.
Taxpayers who failed to pay local property taxes in 2006 might now be able to appeal their tax assessment.
The conclusions were drawn from the appeal, which was won last week by the Tel Aviv-based Energy gym and health center against the municipality.
Energy claimed that the increase in the municipal tax rate of 3.4% in 2001 was above what was legally permissible. The presiding judge Oded Modrik concluded that the Tel Aviv municipality was allowed to levy the petitioner with an exceptional tax rate increase of 1.46%.
Under the Arrangements Bill, local authorities are allowed to file special requests for exceptional municipal tax rates above or below the maximum tariff. The final decision on exceptional increases is made by the Minister of Interior together with the Minister of Finance.
According to the FICC, the 39 local authorities, that were granted special requests for exceptional municipal tax rates above or below the maximum tariff in 2005 cost the business sector NIS 52m. in additional taxation during the year. For example, Yehud increased its 2005 local property tax rate rate by 10%, Yokneam Illit raised it 9%, Yavneh 7%, Jerusalem 5%, and Eilat 4%, the FICC noted.