The treasury is concerned, and they are expressing their concern vividly. They are worried that the positive business cycle that the economy has been riding for the past four and a half years is about to come to an end, and that the blights facing the western economies are now set to affect Israel.
But data on state revenues from taxes released by the Finance Ministry yesterday indicates that for the meanwhile, at least, such concerns are unfounded.
Someone once said that people in the treasury are born pessimists. It's true: January is just the first month of 2008, and it's dangerous to base anything on data from a single month, and it is also clear that tax data represents just one facet of the economic situation. But it's hard to ignore the fact that all the other economic data is positive as well.
"Revenue figures correspond with indicators of economic development in the last quarter of 2007. These point to continued growth in industrial product and export of goods. Sectoral commercial income, services and import of goods also continued to grow, although slightly slowed," the state revenues administrator explained.
Tax revenues have exceeded January 2008 levels of NIS 17.077 billion only twice. The record for a single month was July 2007, with NIS 17.865 billion, and January of last year revenues totaled NIS 17.438 billion.
Anyone who thinks that January is traditionally a high revenues month should keep in mind that state revenue from taxes in January 2006 totaled just NIS 16.258 billion, and the January before that just NIS 13.656 billion.
The treasury, and in particular its budgets division and the accountant general, have a few peculiar habits. The treasury, for instance, and in spite of the criticism of the state ombudsman and comments from the Bank of Israel, does not budget ministries on a monthly basis at the rate of one-twelfth of their annual budget, as legally provided by the government and the Knesset.
The treasury prefers to hold on to the ministry's budget until the end of the year, and then pour it all in at once. The system leaves the ministries in dire financial straits all year long, ending in a deluge of money that is difficult to control.
For instance, the treasury transferred a total of NIS 11.4 billion to the ministries in January. Ministry expenditures in December 2007 totaled NIS 23.9 billion. It's also the fault of the weakness of ministers, finance director generals and deputy director generals.
In January, for instance, the defense ministry expenditures during that month were, as planned 8.6% (about one-twelfth) of the ministry's annual budget, or NIS 4.3 billion. Expenditures in social ministries reached NIS 4.7 billion, just 5.3% of their annual budget. So it's no wonder that by the end of the year the defense ministry has utilized more than 100%, while social ministries have spent only 98% of their budget. Meaning they have failed to utilize more than NIS 4 billion.
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