Tax Authority Chief Warns of Harsh 2027-2028 Budget, Proposes Canceling NIS 200 Bill
Translated & summarized from Mako by baba
The Director of the Tax Authority, Shai Aharonovich, warned that the 2027-2028 budget will be "cruel" without significant economic growth, potentially leading to harsh tax increases. He proposed measures like canceling the NIS 200 bill, which he believes could raise NIS 20-30 billion, but the Bank of Israel opposes this move. The Bank of Israel stated it has the sole authority to cancel banknotes and will not do so.
The story in 5 lines · by baba
- Tax Authority Director Shai Aharonovich warned the 2027-2028 budget will be "cruel" without significant economic growth.
- Aharonovich proposed canceling the NIS 200 banknote to reduce cash circulation and raise NIS 20-30 billion.
- The Bank of Israel opposes canceling the NIS 200 bill and asserts sole authority over currency.
- Other proposed measures include reforms to trapped profits and reintroducing property tax.
- Without new measures, Aharonovich fears broad tax hikes like increased VAT and marginal tax rates.
The Director of the Tax Authority, Adv. Shai Aharonovich, issued a stark warning on Monday, stating that without exceptional economic growth, the 2027-2028 state budget will be "cruel" and necessitate severe austerity measures. Speaking at the annual Tax Consultants Association conference, Aharonovich expressed concern over the lack of projected significant growth, which he believes will force the government to implement harsh tax hikes, such as increasing VAT and marginal tax rates.
To avert such broad tax increases, Aharonovich revealed several measures being considered by the Ministry of Finance. These include reforms to "trapped profits" taxation, the reintroduction of property tax on vacant land, and drastic steps to reduce cash circulation in the economy. The most significant proposal in this regard is the cancellation of the NIS 200 banknote.
Aharonovich emphasized the potential revenue gains from limiting cash usage, estimating that eliminating cash transactions could generate NIS 20 to 30 billion for the state coffers. He cited the recent arrest of the Kfar Saba mayor as an example of the illicit cash that could be uncovered. However, this initiative faces strong opposition from the Bank of Israel.
Aharonovich acknowledged the disagreement, stating there is a "dispute between us and the Bank of Israel." The Bank of Israel has clarified that it alone holds the authority to cancel banknotes and has asserted that the NIS 200 bill will not be canceled.
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