The rumors about the death of the city center evidently overstated the situation.
By LIOR REGEVArnona Revenues and Number of Properties in Select Areas, 2016(photo credit: JERUSALEM INSTITUTE FOR POLICY RESEARCH) Jerusalem Institute for Policy Research,www.jerusaleminstitute.org.il Arnona (municipal tax) is the main source of regular income for Israel’s local authorities, including the Jerusalem Municipality.Residential arnona, however, does not typically cover the cost of the municipal services provided to residents.The rate for nonresidential properties differs from the rate for residential homes. For this reason, local authorities compete for arnona from businesses, as businesses pay more and use relatively few municipal services.Which parts of the city generate the most arnona for the Jerusalem Municipality? The amount generated depends on the types and sizes of properties in each part of the city. For example, places of worship pay the low rate of NIS 63 per square meter, while offices and commercial businesses larger than 150 square meters pay the high rate of NIS 334 per square meter. Because the amount due is determined by square meters, the larger the property, the higher the arnona.In some cases, the rate is further affected by the size of the property: If it is beyond a certain threshold, the cost per meter rises. And in some cases, the location can also affect the rate.By cross-referencing the number of properties and the arnona revenues they generated in 2016, we can identify several phenomena.The revenues from the Mahaneh Yehuda market and Malha Mall areas are comparable, at NIS 25 million and NIS 28m., respectively, before discounts. Yet the number of nonresidential properties in the market area stands at 1,600, compared with only 300 in the mall area – a fivefold difference! The reason apparently lies in the large number of small businesses in the market area, in contrast to the mix of businesses in the mall, which has many regional or national commercial franchises.Moreover, the rumors about the death of the city center evidently overstated the situation. About 1,670 businesses operate in the triangle formed by Ben-Yehuda Street, Jaffa Road and King George Avenue, generating some NIS 44m. for the city, before discounts.The largest arnona-generating areas are the industrial and commercial zones of Talpiot and Givat Shaul. In recent years the mix of properties in both zones has been continuously diversifying.Today they house auto-repair shops, stores and places of commerce, business offices, some remaining traditional industries, and the beginnings of hi-tech industries.Interestingly, the number of nonresidential properties in Talpiot is larger than the number in Givat Shaul by nearly 1,000 (2,518 compared with 1,548), yet the difference in income generated amounts to only NIS 7m. (NIS 105m. compared with NIS 98m., before discounts).Translated by Merav Datan.
Related Tagseconomy of israelisraeli taxes
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