New Taxes Drive Deficit Down

YERUSHALAYIM -

A raft of new taxes has already registered a positive effect on the state deficit, the Finance Ministry proclaimed on Wednesday.

The deficit in the 12 months ending in July was NIS 36.4 billion or 3.8% of GDP, down from a high of 4.65% in February, according to Ministry data.

Besides higher income taxes approved the previous year, which took effect at the start of 2013, recent increases in Value Added Tax (VAT) and taxes on cigarettes, beer and alcohol contributed to NIS 10.5b more in tax revenues from January through July than during the same period the previous year. Gasoline taxes accounted for NIS 17.5b in 2012.

The statistics do not reflect the spending cuts in the state budget passed at the end of July, will determine spending in the last five months of this year. It also sets the deficit target for the year at 4.65% — significantly higher than the current estimates — with a goal of shrinking it to 3% in 2014.

In addition, the Finance Ministry on Wednesday assessed that in 2011, the state lost out on NIS 3.3b in VAT revenues due to exemptions for fruits and vegetables (NIS 2b), tourists (NIS 700m) and Eilat (NIS 600m).