Tax revenues beat forecast last month
It was a rare case of good news on the fiscal front, where the government has struggled to contain a deficit that has widened as tax revenues failed to meet the amounts contained in the original 2012 budget.
The government's revenue from taxes and fees reached NIS 18.5 billion in September, 2.7% higher than it was a year ago and NIS 300 million more than had predicted it would take for the month, the Finance Ministry said on Thursday.
It was a rare case of good news on the fiscal front, where the government has struggled to contain a deficit that has widened as tax revenues failed to meet the amounts contained in the original 2012 budget. In July the cabinet approved a package of tax hikes and spending cuts designed to contain the rising overspending, but Prime Minister Benjamin Netanyahu failed to win over his coalition partners to more austerity measures in the 2013 budget, prompting him to call early elections.
Nevertheless, Bank of Israel Governor Stanley Fischer yesterday praised the Netanyahu government's handling of fiscal policy, expressing astonishment that the government was able to vote on approving tax increases with the knowledge that elections were soon approaching.
"The government acted responsibly the moment the problem arose and acted to address it even though it was clear that elections were in the offing," Fischer said at a press conference during a meeting of the International Monetary Fund in Tokyo.
Fischer said the government had no choice but to impose budget cuts for next year and expressed optimism that elections would yield a government able to tackle fiscal and other challenges. After elections, it will be easier to cope with overspending, he said.
The treasury figures showed that revenue from income and land taxes last month rose 7.9% from September 2011 to NIS 8.8 billion. That rise, however, was offset by falling revenue from indirect taxes, primarily the value-added tax and customs, as well as lower fees and charges.
The State Revenue Authority reported that imports of vehicles plunged in September, with just 10,386 brought into the country, a 23.5% drop from September 2011. But the authority said the decline probably did not signal anything about the state of the economy, but rather the relatively few work days during months due to the High Holy Days.
For the first nine months of the year, state revenues were up a more modest 1.3%, after discounting for inflation from the same time in 2011, to NIS 165.1 billion. That represented a revenue shortfall of NIS 2.5 billion over the amount officials had expected to collect.
Nevertheless, the shortfall has been gradually declining: In June, it was NIS 3 billion and since then there have been months like September, when it exceeded projections.
The budget deficit in September was NIS 2.44 billion, bringing the nine-month total to NIS 19 billion, compared with NIS 10.2 billion in the first nine months of last year.