Israel Tax Authority Proposes ₪10 Billion Tax Hike for 2027-28 Budget
Translated & summarized from Mignews by baba
Israel's Tax Authority has proposed new fiscal measures expected to raise 10 billion shekels annually for the 2027-2028 state budget. Key proposals include an "online VAT" system for instant tax collection and an annual tax on undeveloped land. Aviation taxes are also set to increase, affecting domestic and international flights. The head of the Tax Authority warned that tax burdens are unlikely to decrease, as the state seeks substantial additional revenue to balance the budget.
The story in 5 lines · by baba
- Israel's Tax Authority proposed measures to increase state revenue by ₪10 billion annually for the 2027-28 budget.
- A new "online VAT" system aims for instant tax collection, projected to yield ₪7.5 billion yearly.
- An annual tax on undeveloped land is proposed, ranging from 1.5% to 2.5% of market value.
- Aviation levies could raise domestic flights by ₪12 and long-haul flights by ₪274.
- Tax Authority head Shai Aharonovich stated the state needs ₪30-40 billion in additional revenue.
Israel's Tax Authority has put forward a package of fiscal measures aimed at increasing state revenue by approximately 10 billion shekels annually for the 2027-2028 budget years. The proposals include a significant reform to the Value Added Tax (VAT) system, introducing an "online VAT" mechanism. This system would require VAT payments to be transferred to the state budget instantly upon the completion of a transaction, either by cash or card. Currently, companies can remit VAT after the reporting period concludes. Officials believe this real-time collection will close loopholes related to fictitious invoices and tax evasion, projecting it to generate about 7.5 billion shekels per year on its own.
Additional proposals to boost state income include an annual tax on undeveloped land, ranging from 1.5% to 2.5% of its market value, intended to incentivize owners to build or sell. The existing higher tax rates on the purchase of second and subsequent apartments, set at 8% and 10%, will remain in effect until February 10, 2027. The Tax Authority also plans to introduce a special aviation levy that could increase domestic flight ticket prices by around 12 shekels, European flights by 58 shekels, and long-haul flights to destinations like the US or East Asia by approximately 274 shekels.
Shai Aharonovich, head of the Tax Authority, has cautioned that neither citizens nor businesses should anticipate a reduction in the tax burden in 2027. He stated that the state needs to find between 30 to 40 billion shekels in additional revenue, and the presented package is only a partial component of a broader budget balancing strategy. These initiatives are currently preliminary proposals and will be reviewed by the government and lawmakers during the preparation of the economic arrangement law before final tax policies are approved.
