Israel Considers Abolishing NIS 200 Bill to Combat Black Market and Avoid Tax Hikes

By גד ליאור

Translated & summarized from Ynet by baba

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Hebrew · 9 newsrooms covering

Israel's Tax Authority Director Shai Aharonovich proposed abolishing the NIS 200 banknote to combat illicit cash transactions and avoid significant tax hikes. He warned that tax increases are inevitable due to projected defense spending and budget deficits, potentially generating NIS 20-30 billion by eliminating cash. The Bank of Israel opposes the banknote's abolition. Tax consultants agreed on the need for increases but suggested alternative measures, including taxing rental income and capital gains.

The story in 6 lines · by baba

Israel's Tax Authority Director proposed abolishing the NIS 200 banknote to fight black money and prevent tax hikes.
Eliminating cash payments could generate NIS 20-30 billion annually and avert painful economic measures, according to the Tax Authority.
The Bank of Israel opposes the abolition of the NIS 200 banknote.
Tax increases are inevitable due to projected defense spending, potentially reaching NIS 200 billion annually.
Tax consultants suggested alternative tax measures, including taxing rental income and capital gains.
Finance Minister Bezalel Smotrich was criticized for plans to raise import tax thresholds.

Israel Considers Abolishing NIS 200 Bill to Combat Black Market and Avoid Tax Hikes — Editorial illustration generated by baba News, not a photograph of the event.

The Director of the Tax Authority, Shai Aharonovich, announced on Monday that the abolition of the NIS 200 banknote is back on the table as a measure to fight "black money" and prevent significant tax increases in the coming months. Aharonovich stated that while the Bank of Israel opposes this idea, investigations have revealed extensive cash transactions, even in local authorities, necessitating "harsh measures." He suggested that eliminating cash payments entirely could generate an additional NIS 20-30 billion annually in tax revenue and avert other painful economic steps.

Aharonovich also dismissed promises from politicians present at the annual conference of tax consultants in Eilat, who pledged to prevent post-election tax hikes. He asserted that tax increases are inevitable, revealing that a special team within the Ministry of Finance, including himself and senior officials, is already formulating proposals for the next government. He projected that the budgets for 2027 and 2028 will be "cruel," with defense spending potentially reaching NIS 200 billion annually due to ongoing security challenges, including the possibility of further conflict with Iran.

To fund the high defense budget, Aharonovich suggested considering stricter regulations on "trapped profits" and exploring creative solutions rather than immediate VAT or income tax hikes. He criticized the past abolition of property tax on land as a mistake made by "a group of interested parties." He also mentioned that the government is considering tightening the law on "trapped profits" and that smart financing for defense is preferable to easy solutions like raising VAT or income tax rates.

In response, Yaron Gindi, President of the Institute of Tax Consultants, agreed that tax increases are necessary but advocated for measures that would be less burdensome on the general public. Gindi proposed taxing rental income from the first shekel, reducing taxes on labor, and fully taxing capital gains. He also supported mandatory tax reporting for all citizens and taxing companies like Netflix, which are currently exempt. Gindi criticized Finance Minister Bezalel Smotrich's intention to raise the import tax threshold for personal packages above $75, arguing it would benefit the Chinese economy at the expense of Israelis.

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