Israel May Face Significant Tax Hikes, Warns Tax Authority Chief
Translated & summarized from Behadrei Haredim by baba
Israel's Tax Authority Director, Shai Aharonovich, warned of significant tax increases for the 2027-2028 state budget due to a projected lack of economic growth. The Ministry of Finance is considering measures like taxing "trapped profits," reinstating property tax on vacant land, and restricting cash use, including potentially canceling the 200 shekel banknote. The Bank of Israel opposes canceling the 200 shekel note, asserting its exclusive authority.
The story in 5 lines · by baba
- Israel's Tax Authority Director warned of significant tax hikes in the upcoming state budget.
- The government is considering taxing "trapped profits" and property on vacant land.
- Measures to restrict cash usage, including canceling the 200 shekel note, are being explored.
- Eliminating cash use could potentially increase state revenue by 20-30 billion shekels.
- The Bank of Israel opposes canceling the 200 shekel banknote.
Israel's Tax Authority Director, Shai Aharonovich, has issued a stark warning about potential significant tax increases in the upcoming state budget, citing a lack of expected economic growth. Speaking at the annual Tax Consultants Association conference, Aharonovich outlined several measures being considered by the Ministry of Finance. These include changes to the taxation of "trapped profits," reinstating property tax on vacant land, and further restrictions on cash usage.
Aharonovich expressed concern that without new revenue streams, the government will be forced to raise the tax burden on the public. He described the 2027-2028 budget as potentially "cruel" due to the absence of projected exceptional growth. He cautioned that without alternative budgetary solutions, the government might resort to broad tax hikes, such as increasing VAT and marginal tax rates.
To avert such measures, the Ministry of Finance is exploring avenues to boost state revenue. Proposed options include increasing profit distribution rates within the "trapped profits" reform, reintroducing property tax on vacant land, and implementing measures to reduce cash transactions. A key proposal discussed was the potential cancellation of the 200 shekel banknote as part of the fight against the black market and tax evasion.
Aharonovich suggested that eliminating cash use entirely could significantly increase state revenue, estimating a potential collection of 20-30 billion shekels. However, the proposal to cancel the 200 shekel note faces opposition from the Bank of Israel, which asserts its sole authority over currency matters and has stated the 200 shekel note will not be canceled.
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