A significant move toward advancing Israel’s largest infrastructure project was made today as Finance Minister Bezalel Smotrich signed regulations governing the collection of the “Metro Tax.” This levy, part of the betterment tax imposed on landowners near metro stations, will serve as a key funding source for the 150 billion shekel metro project.
By Nimrod Bossu, Nadlan Center
The Ministry of Finance announced this morning (Monday) that the minister signed the regulations determining how the Metro Betterment Tax will be collected from landowners in the vicinity of metro stations. The purpose of this tax is to finance the construction and development of the metro, considered the most expensive infrastructure project in Israel’s history.
According to the Metro Law, enacted in 2022, landowners in the “areas of influence” around stations—as defined by National Master Plan 70—must pay an increased betterment tax of 75%. Of this, 40% goes to the local municipality, while 35% is allocated to the state as the “Metro Tax.” These funds are one of the government’s primary financial resources for the project, whose total cost is estimated at 150 billion shekels.
Following strong criticism from developers and appraisers, who argued that such a high levy would make projects economically unfeasible, negotiations were held in 2024 under the leadership of then-chair of the Knesset Interior Committee, MK Yaakov Asher, with the involvement of the Chamber of Appraisers. A compromise was reached with the Finance Ministry: the betterment tax in the metro influence zones would be reduced to 60% for the next five years, after which it may be updated to 72%.
According to today’s announcement from the Finance Ministry, the local planning committee will issue the tax assessments to landowners, but the Israel Tax Authority will be the official body to confirm that the tax has been paid. Without this confirmation, property owners who receive a metro tax bill will not be able to change the land registry (Tabu) or obtain a building permit.
The ministry added: “The finance minister signed the wording of the notice that the local authority will send to taxpayers. The Tax Authority will soon announce the opening of a digital system on its website for paying the tax.”
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