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Pundits have said time and again that Israel is weathering the global economic crisis well. But the sober truth is that Israel's revenues from taxes fell dramatically in the year 2008 against preliminary estimates, due to the impact of the worldwide economic travails.

Israel ended 2008 with a deficit of NIS 15.2 billion, the Finance Ministry reported yesterday, which is equivalent to 2.1% of Israel's gross domestic product. Without the financial crisis that mushroomed into a full-blown planet-wide economic meltdown, Israel wouldn't have run a deficit.

Moreover, indicators are that 2009 will be a harder year in which the need for government spending will be all that much greater and in which the government will have much less to spend. The deficit is likely to burgeon in 2009 to as much as 5% of GDP or more.

The 2008 budget had been predicated on tax revenue of NIS 191 billion. In practice, the Tax Authority collected only NIS 184 billion. The drop is 7.7% in inflation-adjusted terms.

Estimated tax revenues are key to building a budget for the year. It is the basis on which the government calculates how much it can spend. A shortfall of nearly 8% is significant.

Worst-hit was income tax, which fell by a steep 14% in inflation-adjusted terms against the estimated figure for the year, falling NIS 7.9 billion short of the forecast.