Israeli gov't spending up 50% since 2010

Rony Hizkiyahu Photo: Tamar Matsafi

The Accountant General's financial report published today shows government spending rising fast.

The financial report by the Israeli government for 2017 published today by the Accountant General shows that government spending is rising at an increasing place. In 2017 alone, spending rose by 1% of GDP. "Civilian spending began increasing in 2016, and this trend continued with greater force in 2017," Accountant General Rony Hizkiyahu wrote. State tax revenue also jumped in 2017, but this was the result of NIS 20 billion in one-time revenue, much of which was at the expense of future tax revenue.

Hizkiyahu himself did not hold the usual press conference, thereby denying the media the opportunity to ask him direct questions. Instead, the sent the report by e-mail, while writing that the information published in the report," is likely to surprise the reader and refute one or two popular misconceptions about how the government functions. For example, it can be revealed that total government spending rose by over 50% in 2010-2017, from NIS 202 billion to NIS 310 billion." Hizkiyahu also states that most of the growth was in spending by civilian ministries: the Ministry of Health's budget has grown by 77% since 2010, the Ministry of Labor, Social Affairs and Social Services' budget by 68%, and the Ministry of Education's budget by 65%. "Obviously, this increase in government spending would have been impossible without a consistent and substantial rise in GNP and tax payments to the government on the one hand and responsible economic management on the other, which has made it possible in recent years to lower the debt burden and interest payments and divert more resources to the welfare of the people," the report states.

The report shows that spending by civilian ministries reached a peak of 19.3% of GDP in 2017, 1% higher than in 2016. Defense spending remained steady at 5.2% of GDP, while interest payments on the government debt dropped to from 2.5% of GDP in 2016 to 2.3% in 2017.

State revenue increased from 25.4% of GDP in 2016 to 26.4% of GDP in 2016, but most of the increase is attributable to the opportunity given to pay a lower tax on dividends, which increased current government revenues at the expense of future revenues. One-time revenue from this concession amounted to NIS 11 billion, while the state received NIS 4 billion in one-time revenue from taxes on profits from Intel's acquisition of Mobileye. One-time revenue totaled NIS 20 billion in 2017, but the state reduced this sum by NIS 4.2 billion deposited in a property tax fund.

The report also provides an important figure for state tax revenue lost as a result of the Buyer Fixed Price Plan, which has hitherto been unknown to the market. According to the report, the state lost NIS 5.26 billion in revenue from implementation of the plan in late 2015: NIS 3.7 billion in direct revenue from marketing of land and the rest from subsidies for development in the field and state grants to buyers under the plan. The actual figures are higher, because the published figures are estimates for the period up until March 2018.

Published by Globes [online], Israel business news - www.globes-online.com - on October 3, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Rony Hizkiyahu Photo: Tamar Matsafi
Rony Hizkiyahu Photo: Tamar Matsafi
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