Israel's Tax Revenue Surges 13.3% Amidst Stagnant Civilian Spending
Translated & summarized from Walla by baba
Israel's tax revenues have surged by 13.3% to NIS 443.7 billion this year, NIS 52 billion more than last year. This increase occurred while civilian government spending rose by only 0.3%. September saw a 6% rise in tax collection, though some payments were deferred due to holidays. The growing revenue and controlled spending have helped reduce the national deficit significantly.
The story in 6 lines · by baba
- Israel's tax revenue increased by 13.3% to NIS 443.7 billion this year.
- Civilian government ministry spending rose by only 0.3% year-to-date.
- Real estate tax revenue declined by 18% in September.
- Self-employed tax payments rose 15% year-to-date, while corporate taxes rose 7%.
- The national deficit has decreased to NIS 29.5 billion year-to-date.
- Defense spending increased by 9.7% this year.
Israel's tax revenues have seen a significant increase of 13.3% since the beginning of the year, reaching NIS 443.7 billion, which is NIS 52 billion more than in the same period last year. Even after accounting for inflation and tax changes, this represents a real increase of 8.8%. This data comes from a September report by the Ministry of Finance detailing state tax revenues.
While tax collection has risen sharply, the expenditures of civilian government ministries have remained largely unchanged. In September alone, the state collected NIS 46.1 billion in taxes, a 6% increase compared to September of the previous year. The Ministry of Finance noted that tax payments, particularly NIS 500 million in VAT and other taxes, were deferred to October due to the High Holidays.
Analysis of the September figures shows that corporate tax payments increased by 12% year-over-year, while collections from self-employed individuals decreased by 10%. However, looking at the year to date, self-employed tax contributions rose by 15%, contrasting with a 7% increase from corporations. Real estate tax revenues experienced a decline, with September collections down 18% to NIS 1.3 billion. Both purchase tax and capital gains tax saw decreases of 16% and 20% respectively, with the trend of lower real estate tax revenue continuing over the first nine months of the year, showing a 3% decrease.
Value Added Tax (VAT) revenues, however, continued to grow, with NIS 14.7 billion collected in September, an 8% increase year-over-year, partly due to the state returning less VAT to businesses. Year-to-date VAT revenue is up 7%. In contrast, capital market tax collection in September fell by 9%, with taxes on securities down 14%, though year-to-date collections in this sector have surged by approximately 53%.
The government's overall spending has increased by only 3.4% since the start of the year, significantly less than the revenue growth. Defense spending rose by 9.7%, while civilian ministries saw a minimal increase of 0.3%. This disparity has helped reduce the national deficit, which stands at NIS 29.5 billion year-to-date, compared to NIS 56.3 billion last year. However, September saw a deficit of NIS 10.1 billion, an increase from NIS 9.5 billion in September of the previous year. The 12-month rolling deficit remains at 3.2% of GDP. The Ministry of Finance anticipates a faster increase in government spending towards the end of the year, which could alter the revenue-expenditure balance.
