The government's deficit is getting out of control. According to unaudited figures that have reached "Globes", the government deficit in June alone was some NIS 5 billion, which is higher than the cumulative deficit for January to May 2012. Therefore, in the first half of this year, the government deficit totaled about NIS 10 billion, almost double the deficit for the corresponding period in 2011, which amounted to NIS 5.3 billion.
The high deficit in the first half of 2012 can be explained by high spending, chiefly in March and April, reaching NIS 26 billion. These figures make the need for an immediate tax hike even more urgent.
The original deficit target for this year was 2.5% of GDP, but in the light of the decline in tax revenues because of the slowdown in economic growth, the Ministry of Finance rushed to revise the target to 3.4% of GDP. According to the figures revealed for the first time today, it looks as though the deficit for 2012 will be about 4% of GDP.
Last week, Minister of Finance Yuval Steinitz expressed doubt about the ministry's ability to abide by the deficit target, and said at the Caesarea Forum held by the Israel Democracy Institute that " we were sure that we would meet the target, but now we are less sure; we will wait another couple of months and then decide whether to revise the target for 2102 as well."
"Globes" has also learned that state tax revenues totaled some NIS 16.4 billion in June, representing a nominal rise of 6.5% in comparison with June 2011. However, this is the lowest monthly amount of tax collected so far this year, and the lowest since October 2011.
In the first half of 2012, tax revenues totaled NIS 109.3 billion, compared with NIS 106.7 billion in the corresponding period last year. However, it is important to point out that there was a one-time tax windfall of NIS 3.7 billion this year because of sales of securities following taxation changes introduced as part of the recommendations of the Trajtenberg committee. Without this revenue, state revenues would have been NIS 1.1 billion lower in the first six months of 2012 than in the first six months of 2011.
Furthermore, despite the one-time revenue, there is still a shortfall of NIS 3 billion from the original tax collection target set in the budget.
Published by Globes [online], Israel business news - www.globes-online.com - on July 2, 2012
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