Israel Head Suggests Eliminating NIS 200 Bill, Possibly All Cash
Translated & summarized from Calcalist by baba
He cited recent corruption allegations in Kfar Saba, where cash was allegedly used for bribes, as a reason for the proposal, despite Bank of Israel's opposition. אהרונוביץ' also proposed increasing the dividend distribution requirement for the trapped profits tax and promised a review of its economic impact in 2027.
The story in 5 lines · by baba
- The move could increase annual tax collection by an estimated NIS 20-30 billion.
- The suggestion follows corruption allegations in Kfar Saba involving alleged cash bribes.
- Bank of Israel opposes canceling the NIS 200 banknote.
- The head also suggested increasing the trapped profits tax dividend distribution requirement to 8%.
- A review of the trapped profits tax's economic impact is planned for 2027.
Speaking at a conference hosted by the Tax Consultants Association, אהרונוביץ' stated that the 2027-2028 budget would be "cruel" and that while no one disputes the security establishment's needs, "we will have to cancel part of the cash." He noted that Bank of Israel opposes canceling the NIS 200 bill, but referenced the recent corruption investigation involving the mayor of Kfar Saba, where cash was allegedly the primary method of bribery.
אהרונוביץ' estimated that eliminating cash use in Israel could generate an additional NIS 20 to 30 billion annually in tax collection. He also surprised attendees by suggesting a potential increase in the "trapped profits tax" rate, requiring companies to distribute 8% of their profits as dividends, up from the current 6%, to avoid the tax.
In response, the association's president, ירון גינדי, expressed concern, calling it the most worrying issue for the business sector. Regarding rumors of abolishing the trapped profits tax altogether, אהרונוביץ' expressed skepticism, stating it's unlikely to happen completely as the government would need to find revenue elsewhere. However, he suggested adjustments could be made.
He further commented on the trapped profits tax, stating he remains unconvinced it harms economic activity, but acknowledged the need for more data. He promised a review in 2027, as previously pledged, to assess its impact on growth.
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