The Israeli authorities impose the Israeli tax system on the occupied city of Jerusalem, in violation of 1949 4th Geneva Convention regarding the protection of civilian rights in time of war.
The Israeli tax system was designed according to the Israeli level of development and standard of living. The Arnona tax is yet an additional burden for Palestinian Jerusalemites. It is collected on the basis of the size of dwellings, whether residential or commercial, and regardless of the income generated from commercial dwellings.
The tax is calculated at a rate of NIS 35 per square meter for buildings classified as category 'A' and NIS 23 per square meter for buildings classified category 'B'. Commercial stores of an area more than 45 square meters pay NIS 120 per square meter regardless of their location. It must be noted that the Jerusalem Municipality has intentionally classified most Jerusalem quarters as category 'A'. Between 1994 and 1998 the municipal revenue from Arnona tax in East Jerusalem rose from NIS 32.35 million to NIS 65.05 million in 1998. In 1997, the Arnona tax totalled 45.5% of the Jerusalem Municipality revenue.
The minimum Arnona collected from offices and commercial stores in Jerusalem is far higher than other cities, in Haifa; for example, NIS 36.99 is the minimum annual Arnona per square meter and NIS 204 is the maximum Arnona paid, with no in between.
The Israeli GNP per capita is at least 8 times the GNP per capita in Occupied Jerusalem, and more than 10 times the Palestinian GBP per capita in the rest of the WBGS. The taxes imposed on Palestinian residents of Occupied Jerusalem include Income Tax at 15%-50% (38.5% on businesses' income), National Insurance deductions at 10%, Property Tax at 2.5, and the Arnona Tax. The data provided by the Chamber of Industry and Commerce in Jerusalem states that the amount of taxes paid by Palestinian Jerusalemites equals 40% of the total city of Jerusalem.
The scarce, poor service the Jerusalem Municipality and Israeli institutions provide are not in accordance with the amount of taxes paid by Jerusalemites Dr. Fadil Al Nakeeb argues in a study regarding the economy of Jerusalem, that the quantity of revenue collected from Arab Jerusalemites totals 26% of total municipal revenue, while the government only returns 5% to the Arab taxpayers. Dr. Mohammad Al Dajani argues that the Jerusalem Municipality collects approximately NIS 150 million in insurance deductions from Jerusalemite Palestinians but spends only NIS 20 million.
