Business associations in Tel Aviv are organizing a collective action to take legal steps should the Tel Aviv municipality fail to correct the city's overcharged municipal tax tariff for 2007 and reimburse surcharges.
"Together with the Organization of the Self-Employed, we will consider taking legal steps, if the Tel Aviv municipality refuses our request to review and update tax assessment for 2007 to put in accordance with the court ruling in 2001," said Uriel Lynn, President of the Federation of Israeli Chambers of Commerce, who is a lawyer by profession. "Maybe we made a mistake that we gave credit to the Tel Aviv municipality in the belief that they were acting lawfully. Today, the business sector in the city is opening a new page against the municipality."
Since the Arrangements Bill in 2001, local authorities and municipalities were allowed to file special requests for exceptional municipal tax rates above or below the raised tariff of 1.25% but only up to a limit of 10% above the sum, which the municipality was permitted to collect in the first place.
"However, since 2001, there has been a par of 14 to 15% in how much businesses in Tel Aviv have been overcharged by the municipality," said Soly Sakal, chairman of the Sakal Group. "Thus the height or burden of municipal taxes has been playing a crucial part in the decision of many businesses to open their businesses in one city rather than other and in the case of Tel Aviv has driven away many businesses to other cities."
Sakal added that the high municipal tax charges in Tel Aviv, had forced businesses to close down.
"I have seen cases where the municipal tax charges were higher than the rental expenses," he noted.
Other business people, meanwhile, complain that they were facing difficulties in renting out commercial property because of the high municipal tax rate in Tel Aviv.
"I had a property in Tel Aviv, which I was forced to sell as I didn't manage to rent it out for three years, because of the high municipal tax rate," said Nili Kariv, general manager of Ophelia Nik.
According to estimates by the FICC, the Tel Aviv municipality has been overcharging businesses for payment of local property taxes over the past five years, costing the sector NIS 170 million. In addition, a FICC survey of 12 small and large local authorities and municipalities found that the Tel Aviv municipality tax in 2004 for businesses was on average 74% higher than in Jerusalem, Petah Tikva, Haifa, Rishon Lezion and other cities.
Last month, the Tel Aviv Court for Administrative Affairs ruled that the Tel Aviv municipality overcharged commercial property owners by 8% in local property taxes from 2001. The presiding judge, Oded Modrik, concluded that the municipality was allowed to levy the petitioner with an exceptional tax rate increase of 1.46% and not the 3.4% that was charged.
"Instead of the legally permissible exceptional tax rate of 1.46%, the Tel Aviv municipality has been charging businesses 13.74%," said Lynn .