Ram Belinkov, the Finance Ministry's budgets director, expects a large drop in tax revenues in 2008, and for the budget deficit to be larger than planned. Belinkov told the Knesset Finance Committee on Monday that despite the drop in tax revenues, the budget would not be cut this year.
According to Be-linkov, this year's budget cuts have nothing to do with the drop in revenues, but are only intended to prevent increases in government spending.
"The decision not to cut the budget because of lower revenues sends a significant fiscal message," he told the committee. "When the economy expects a slowdown - whether it is sliding in to a recession of low growth - the first thing businessmen tend to do is to reevaluate their investments. In order to create a strong incentive to invest ... we have decided to allow accelerated depreciation over two years," explained Belinkov. He said the move was expected to cost the state NIS 1.5 billion to $2 billion.
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