Mekorot petitions the Supreme Court against the government: Limit the property tax on water facilities
The petition was filed following a 16-fold increase in property tax on a water facility in the Hof Ashkelon Regional Council. Mekorot warns that without intervention, other local authorities will follow suit, and demands to set a uniform property tax rate for all water facilities in the country.
Mekorot, the national water company, is petitioning the Supreme Court against the Ministries of Finance and Interior, demanding to limit the property tax (arnona) imposed on its water facilities. The petition was filed following a 16-fold increase in property tax imposed by the Hof Ashkelon Regional Council on one of the company's facilities. Mekorot warns that this is a precedent that could lead to a surge in the company's property tax payments across the country, while the compensation it receives through water tariffs is fixed (as a percentage of property) and is not related to the property tax actually collected.
A petition by a government company against the government is considered an exceptional step. What led to it is the decision of the Hof Ashkelon Regional Council to dramatically increase the property tax on a water facility within its jurisdiction: from 28 agorot per square meter to 5 shekels per square meter starting in 2029. According to Mekorot, this is an increase that will boost the council's revenues by approximately 19.5 million shekels per year at the company's expense. The property tax increase was approved in 2025 by the Ministry of Interior, which is required to approve exceptions to property tax rates.
Mekorot emphasizes that this is a groundwater treatment facility that does not require special investment by the local authority.
"The local authority enjoys all the benefits but does not bear the cost, and therefore has no incentive to curb its 'fiscal appetite'," say Mekorot, calling it "topographical luck."
According to them, this is an unfair distribution mechanism, as the property tax increase is not reflected in the compensation Mekorot receives through water tariffs, and if it were translated, it would mean an unfair transfer of costs to all water consumers. "The local authority collects; the consumer pays. The authority enriches its coffers; the public, as a whole, bears the cost," the petition states.
Therefore, the company demands that the government set a uniform and symbolic property tax rate for all water facilities across the country, without the discretion of local authorities.
A government decision was already promoted in the past
The Water Authority, which serves as Mekorot's regulator and often stands against it in disputes, supports the company's position this time. It states, "There is room to anchor in law a uniform and symbolic property tax rate that will be applied throughout the country to water and sewage facilities, and in particular to large-area facilities that do not consume municipal services at all." The Authority further warns that the current situation "leads to a dramatic increase in property tax rates on water and sewage facilities, and to an increasing burden on the water sector."
In the petition, Mekorot notes that as early as 2023, the government decided to set in regulations a classification and a minimum and maximum rate for property tax on national infrastructure, including water systems, sewage, power plants, and electrical facilities, but this was never implemented. Now, the Supreme Court will likely demand a response from the government ministries, which will choose whether to grant Mekorot's request or enter into a real legal battle with it.
