Israel's slips into fiscal deficit

Ministry of Finance Photo: Rafi Kutz
Ministry of Finance Photo: Rafi Kutz

The Ministry of Finance has reported an annual fiscal deficit after nine months of fiscal surplus.

After nine months of fiscal surpluses, Israel reported a fiscal deficit of NIS 300 million for the 12 months ending March 2023, the Ministry of Finance reports - 0.01% of GDP. The Accountant General Division blames the deficit on lower tax revenues, after exceptionally high tax revenues last year.

Government revenues have fallen to NIS 120 billion since the start of the year, down 4.4% from the corresponding period of last year. Over the same period government expenditure grew by 4.4% to NIS 106 billion. So in the first three months of 2022 there was still a fiscal surplus of NIS 14 billion, although revenues fell at exactly the same rate that expenditure rose.

Revenues from direct taxes amounted to NIS 20 billion in March 2023, down 8% from March 2022. The most significant fall was in revenues from real estate taxes which fell 43% in real terms in March to just NIS 1.5 billion. The fall in real estate taxes reflects the continued downturn in the housing market.

There was also a 20% fall in VAT collection in March 2023, compared with March 2022, to NIS 9.7 billion as consumers spent less due to higher interest rates. This represented a loss of NIS 1.8 billion for the state coffers. In the first quarter of 2023, VAT collection fell 13% form the corresponding period of 2022.

Although the fiscal deficit over the past 12 months is the smallest of fractions, Ministry of Finance officials express concern about a slowdown in growth, which in turn will translate into lower state revenues.

Published by Globes, Israel business news - - on April 16, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Ministry of Finance Photo: Rafi Kutz
Ministry of Finance Photo: Rafi Kutz
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018