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The state's income from tax revenues dropped steeply in October compared with the same month of the year before.

Collection was down nearly 13% from October 2007. The slump in income will force the treasury to cut planned funding for government ministries in November and December, necause the budget deficit will be higher than planned.

The Finance Ministry will also have to lower its estimates of tax revenues for 2009, as the treasury expects total tax collection for this year to be at least NIS 4-5 billion less than the originally forecast NIS 190 billion for all of 2008.

The 2009 budget was based on tax revenues of NIS 203 billion for the year.

Government spending in October was below average, only NIS 19.8 billion - 9.7% below normal - mostly due to the holidays.

Tax revenues have been lower every month so far this year compared to 2007, with the biggest drops in direct taxes, income taxes and real estate taxes. These were down 16.6% compared to last October.