Israel Tax Authority Chief Proposes Eliminating NIS 200 Bill, Cash Use

The Director of the Tax Authority, Shai Aharonovich, has called for the cancellation of the 200 shekel banknote and potentially the complete elimination of cash usage in Israel. Aharonovich stated that such a move could significantly boost state tax revenues, estimating an additional 20 to 30 billion shekels annually, as part of the ongoing fight against the "black economy." He made these remarks on Monday at a conference of the Tax Consultants Association, acknowledging that the Bank of Israel opposes the cancellation of the 200 shekel note.

Aharonovich cited the recent case involving the mayor of Kfar Saba as an example of issues that could be addressed by reducing cash circulation. He emphasized that while the Bank of Israel is resistant to canceling the 200 shekel bill, the broader elimination of cash might be necessary. The Tax Authority Director explicitly stated that ending cash use could bring in an extra 20-30 billion shekels per year, potentially averting other difficult fiscal measures, but reiterated the Bank of Israel's opposition.

These proposals are Aharonovich's estimations and do not represent a decided policy. The Bank of Israel has indeed expressed its opposition to canceling the 200 shekel note. Aharonovich also warned of a "harsh" budget in 2027 and 2028, predicting no exceptional growth and citing multiple fronts, including potential defense budget increases to around 200 billion shekels due to ongoing conflicts. He noted that the defense budget, coupled with issues in reserve duty mobilization, will likely compel the next government to raise taxes.