Jerusalem, 3 February, 2026 (TPS-IL) — Israel’s State Comptroller has uncovered widespread flaws in the way local municipalities assess and collect property taxes, finding that two in five complaints were justified — leading to corrective measures or refunds amounting to hundreds of thousands of shekels, according to a report released Tuesday.
State Comptroller Matanyahu Englman’s audit examined complaints about arnona — Israel’s municipal property tax levied on property holders — submitted between January 2023 and November 2025 to the Public Ombudsman’s Office, which operates under the State Comptroller. The investigation found that complainants and others affected by the decisions received a combined sum of NIS 376,508 ($121,300) in refunds and adjustments.
The State Comptroller regularly reviews Israel’s preparedness and the effectiveness of government policies.
“Populations in need of arnona discounts are sometimes more exposed to information gaps and accessibility difficulties vis-à-vis the authorities,” Englman wrote in the report’s introduction. “The Public Ombudsman’s Office sees paramount importance in ensuring the realization of their rights and assisting them in dealing with public bureaucracy.”
The findings are particularly significant given the role of arnona as the primary independent source of revenue for Israeli municipalities. In 2023, local authorities collected NIS 31.237 billion ($10.06 billion) in arnona, with a collection rate of 72 percent, the report said, citing Interior Ministry data.
The most common complaints involved discounts and exemptions, accounting for 41.8 percent of all cases. These discounts are intended for vulnerable populations, including low-income families, people with disabilities, senior citizens, and single parents. Of these complaints, 41.6 percent were found justified or resulted in corrections.
Among the problematic cases highlighted in the report was a woman with disabilities in Lod whose disability was recognized retroactively by Israel’s National Insurance Institute. She was initially denied the corresponding 80 percent arnona discount for the retroactive period. Only after the ombudsman’s intervention did the municipality apply the discount from the original eligibility date in August 2020.
In another case, the municipality of Beit Shemesh canceled a 90 percent discount for a father of 13 children after discovering that a storage unit had been converted to an office. “The municipality claimed that since income could be derived from it, this should be taken into account in the income test,” the report stated. The ombudsman established that the conversion occurred after the discount application was submitted, and the discount was restored.
The report also documented systematic errors in calculating discounts. The Jerusalem municipality initially included coronavirus relief grants in income calculations for discount eligibility, despite legislation explicitly excluding such payments. After the ombudsman’s intervention, the city recalculated 849 similar cases of self-employed residents who had applied for income-based discounts.
Property measurement errors emerged as another significant issue. In Tel Aviv-Jaffa, a resident paid for 28 square meters for 12 years when her apartment was actually 25 square meters. The municipality had not measured the property in decades and could not locate the original measurement documentation. Following the investigation, the city refunded overpayments dating back seven years.
The geographic analysis revealed that Jerusalem had the highest complaint rate at 15.1 complaints per 100,000 residents, while the municipality of Harish had the highest rate of justified complaints at 60 percent.
Notably, the report found that women comprised only 34.7 percent of complainants, significantly lower than their 50.4 percent share of the general population. The highest number of complaints came from residents in lower socioeconomic municipalities, primarily regarding discounts and exemptions.
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