Budget deficit lowest since August 2011

Tax collection rose 15% in February as the deficit fell to 2.7% of GDP.

Tax collection in February reached NIS 19.8 billion, up 15% in real terms from February 2013. Consequently the accumulated budget deficit fell to NIS 28.6 billion or 2.7% of GDP, compared with 3.15% at the end of December 2013 and 3% at the end of January 2014. The budget deficit is at its lowest point since August 2011, and is below the government's budget deficit target of 3% of GDP.

Ministry of Finance figures show that the budget deficit in February itself was NIS 1.8 billion, while there was a NIS 2.6 billion surplus in the first two months of 2014 compared with a deficit of NIS 1.8 billion in the corresponding period of 2013. Overall government expenditure grew to NIS 22.5 billion in February with the Ministry of Defense budget growing 8% compared with average growth of 3.7% in ministry budgets.

February showed an unexpected rise in tax collection, which grew 15% while direct taxes were 20% up on February 2013. Part of the rise was due to a dramatic fall in income tax rebates in February 2014 compared with February 2013 when there was an exceptional level of rebates.

The figures also show that over the past two years tax collection has risen at an annual rate of 4%.

Analyzing tax collection data shows a rise in virtually every area. Collection from income tax deducted at source was up 3.4%, tax from the capital market soared 25%, and from real estate rose 23%. On the other hand companies tax collection fell 5%. VAT collection rose in part because the tax rate has risen to 18% from 17% last year, while purchase tax collection on imports rose 10%.

Published by Globes [online], Israel business news - www.globes-online.com - on March 6, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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