Tax Authority Chief Warns of Harsh 2027-2028 Budget, Proposes Eliminating NIS 200 Bill

By ליאור באקאלו

Translated & summarized from N12 by baba

CenterCharged tone

Hebrew · 14 newsrooms covering

The Director of the Tax Authority, Shai Aharonovich, warned that the 2027-2028 budget will be "cruel" due to a lack of expected economic growth. He proposed measures including eliminating the NIS 200 bill to raise NIS 20-30 billion and combat the black market. The Bank of Israel opposes the banknote's cancellation, asserting its sole authority on the matter.

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 eliminating the NIS 200 banknote to potentially raise NIS 20-30 billion.
Other proposed measures include reforms to "trapped profits" and reintroducing property tax.
The Bank of Israel opposes the elimination of the NIS 200 banknote.
Aharonovich stated that without new solutions, broad tax increases like VAT hikes may be necessary.

Tax Authority Chief Warns of Harsh 2027-2028 Budget, Proposes Eliminating NIS 200 Bill — Editorial illustration generated by baba News, not a photograph of the event.

The Director of the Tax Authority, Adv. Shai Aharonovich, issued a stark warning on Monday, stating that the upcoming 2027-2028 state budget will be "cruel" without exceptional economic growth. Speaking at the annual Tax Consultants Association conference, Aharonovich painted a grim picture of the Israeli economy, emphasizing the need for significant measures to avoid heavy tax increases.

"We are not seeing exceptional growth," Aharonovich declared, adding that without "fundamental solutions," the country will face severe tax hikes, potentially including a rise in VAT and marginal tax rates. To avert such broad tax increases, he revealed several measures being considered by the Ministry of Finance.

Among the key proposals are reforms to "trapped profits" taxation, the reintroduction of property tax on vacant land, and drastic steps to reduce cash circulation, most notably the elimination of the NIS 200 banknote. Aharonovich believes that abolishing cash usage could generate NIS 20 to 30 billion in revenue by curbing the black market, citing the recent arrest of the Kfar Saba mayor as an example of cash-related corruption.

However, the proposal to eliminate the NIS 200 bill faces strong opposition from the Bank of Israel. Aharonovich acknowledged a "disagreement" with the central bank, which has clarified that it alone holds the authority to cancel banknotes and has stated that the NIS 200 bill will not be abolished.

The coverage