Alleys of the Old City of Jerusalem, December 20, 2023.

Credit: 

Jose Hernandez Camera 51, Shutterstock

Blog Post

Inflation Hits Palestinian Jerusalemites Hard While the City Doubles Municipal Tax

The price of coffee in Jerusalem has risen insanely,” said Mustafa Ahmad, 65. “An ounce of coffee used to cost 14 shekels, but now it has now reached [from] 14 to 20 shekels. This cannot be accepted.”1 Carrying a bag of ground coffee whose warm aroma surrounded him, he made a strong complaint about the rise in cost. He did not plan to stop drinking coffee, he told Jerusalem Story, but he would have to reduce his daily coffee intake.

The increase in the cost of coffee has been accompanied by a spike in the cost of other items, all of which have alarmed Palestinian Jerusalemites.

All evidence since the beginning of 2025 suggests that the wave of rising prices will break the backs of many Palestinian Jerusalem families and push some below the poverty line. This will be clearly reflected in the coming months.

One of the owners of an Old City shop told Jerusalem Story that he owes more than NIS 100,000 to the municipality for the arnona tax. The Jerusalemite (who asked not to be identified for fear of being targeted) was surprised by the noticeable increase in the rate of the arnona tax on Palestinian residences and shops. He said that, in addition to the unjustified tax hike, there is a new tax rate for those who have moved into a new rented or purchased property since 2022 that almost doubled the arnona tax on their housing units. “It is now possible that two apartments in the same building with exactly the same size will be taxed differently depending on the date of registration [occupancy].”2

He added that authorities have ordered business owners to make sure their shop signs include Hebrew.

Property tax on a Palestinian Jerusalemite home address in 2025 is almost double that of 2024.

As shown on this bill, property tax on a Palestinian Jerusalemite home address in 2025 is almost double that of 2024.

Credit: 

Courtesy of the authors

It is not unusual for a municipality to have different rates for property depending on the state of a neighborhood or a business area. However, all areas in Jerusalem—the east, the west, the Old City, and the New City, whether beyond the Separation Wall or inside it—have the same rating (AA) and the same tax rate, regardless of the services provided to that community. Services available to Jewish residents—nice roads and sidewalks, playgrounds and gardens, centers for youth and the elderly, regular and reliable garbage collection—are not available in Palestinian areas of Jerusalem.

The frustrated merchant asked a simple but profound question: “Who is responsible to initiate a legal response to these and other measures in Jerusalem? Is it the Chamber of Commerce? Human rights organizations? The Jerusalem Unit in the Palestinian Authority? The Palestinian Jerusalem Ministry? The Popular Congress for Jerusalem? Isn’t it time to organize our situation?”

“Isn't it time to organize our situation?”

Palestinian shop owner

Social activist Dimitri Diliani, head of the National Christian Forum in the Holy Land and a resident of East Jerusalem, described the price hike as having political dimensions. “The alarming and unprecedented rise in poverty rates among our people in occupied Arab Jerusalem clearly reflects the systematic political goals of the occupation state, which uses oppressive economic tools.”3 Diliani told Jerusalem Story that the biggest hike has been the arnona municipal tax. This has produced a suffocating living reality which many believe is purposely aimed at forcibly displacing Palestinians from the occupied city, he said.

Diliani explained that these policies are not made solely for economic purposes: “It is part of a comprehensive occupation strategy aimed at emptying the city of its people and changing its demographic, cultural, civilizational and historical character.”

According to official Israeli statistics published by Jerusalem Institute for Policy Research, 60 percent of Palestinians in Jerusalem were living below the poverty line in 2021, almost twice the number of Jews (31 percent).4

Jerusalem’s Old City, November 2023

The Old City streets are shuttered and empty during the second month of Israel’s genocidal assault on Gaza, November 2023.

Credit: 

Mays Shkerat for Jerusalem Story

Ziad Hammouri, head of the Jerusalem Center for Economic and Social Rights, told Jerusalem Story, “The high poverty rate in Jerusalem, which is set to rise further in the current year, will show that more than 80 percent of the Arab population of Jerusalem will soon be living beneath the poverty line. This is directly related to the siege imposed by Israel on the Holy City since the signing of the Oslo Accords, which led to the isolation of Jerusalem from its Palestinian surroundings.”5 He asserts that the Israeli policy led to a state of “commercial stagnation” and also observed that many shops in the Old City have “closed their doors due to the absence of shoppers from the West Bank and the Gaza Strip.” The number of shoppers from other areas of the West Bank has been in decline for more than two decades, as Israel tightened and restricted access to Jerusalem.

According to Hammouri, “The volume of taxes paid by [Palestinian] Jerusalemites is equivalent to 35 percent of the Jerusalem municipal budget, but the volume of services provided by the municipality to the Arab residents of Jerusalem does not exceed six percent, and the difference goes to serve Jewish settlements and neighborhoods.”

Jerusalem Center for Social and Economic Rights (JCSER)

Protecting and promoting the social and economic rights of Palestinian Jerusalemites 

“More than 80 percent of the Arab population of Jerusalem will soon be living beneath the poverty line.”

Ziad Hammouri, head of the Jerusalem Center for Economic and Social Rights

Statistics from the Israeli National Insurance Institute report show that the monthly poverty line for the year 2023 was NIS 3,324. Those whose monthly incomes fell below this amount live in a state of poverty according to the indicators of the 38-member Organization for Economic Cooperation and Development (OECD). According to the report, the monthly poverty line for a married couple in the State of Israel is NIS 6,648. The poverty line for a couple with three children is NIS 12,465. Poverty rates in Israel are high, and in 2023 there were 1,980,000 million people living in poverty in Israel, including 872,000 children and 159,000 senior citizens.6

Jerusalem’s arnona tax has shot up at a time when Arab residents are increasingly living in poverty. This high municipal tax is enforced even in isolated areas of the city, which means that each family, no matter where they live and what their household income is, must budget for thousands of shekels more than it usually pays each year in taxes.

Referring to the arnona increase, Diliani told Jerusalem Story:

International law is clear in its stance on these practices. The occupation authorities’ imposition of their tax laws and regulations on the people of Jerusalem, as an occupied territory, is a flagrant violation of the Fourth Geneva Convention and UN resolutions. These policies are not only a violation of the economic and social rights of our people but are part of the occupation’s ongoing crimes that target the Palestinian national identity and Palestinian presence in the city.

This high municipal tax is enforced even in isolated areas of the city.

Ziad Hammouri described the arnona tax as a sword hanging over the necks of Jerusalemites: “It has increased their suffering.” Jerusalem is considered an occupied area according to international law (see “The Legal Status of Jerusalem: An Introduction to International Humanitarian Law in the Palestinian Context.”)

International law mandated that the occupier has the right to collect taxes but does not have the right to benefit from them.

In our case, Israel benefits from the property tax [that Palestinians pay]. What worries Palestinian Jerusalemites is that this tax is one of the important tools pressuring our presence; it [allows the state] to seize properties due to the accumulation of debts on property owners, there are many shops in town with municipal-appointed assessors [due to their high business debts], and this is the beginning of the campaign to seize Arab properties in Jerusalem.

Hammouri estimated that about 70 to 80 percent of Arab Jerusalemites are unable to pay the arnona tax, and the unpaid back taxes they owe the Jerusalem Municipality are growing.

Posted in:

Notes

1

Mustafa Ahmad, interview by the authors, January 14, 2025.

2

Anonymous (shop owner), interview by the authors, January 16, 2025. All subsequent quotes from the shop owner are from this interview.

3

Dimitri Diliani, interview by the authors, January 11, 2025. All subsequent quotes from Diliani are from this interview.

4

Omer Yaniv, Yair Assaf-Shapira, Netta Haddad, and Ariel Gefen, Jerusalem Facts and Trends 2023 (Jerusalem: Jerusalem Institute for Policy Research, 2023), 13.

5

Ziad Hammouri, interview by the authors, January 12, 2025. All subsequent quotes from Hammouri are from this interview.

6

The report has not yet been published, but the statistics in the report appear on the government website National Insurance. See National Insurance, “The report on poverty and inequality for 2023” [in Arabic].

Load More Load Less