Israel Will Miss Its 2019 Target for Tax Revenue, Official Says

The statement contradicts a prediction by Finance Minister Moshe Kahlon, who is already taking heat for planned price rises for electricity, water, municipal taxes and many food products

FILE Photo: Finance Minister Moshe Kahlon in a cabinet meeting, November 2018.
Emil Salman

The Finance Ministry will not reach its goal for tax receipts in 2019, according to a senior treasury official, contradicting an earlier statement by Finance Minister Moshe Kahlon, who now says "there is no special problem" and notes his record of fiscal responsibility since taking over in 2015.

The official told Haaretz that the updated forecast for tax revenue stood at 322 billion shekels ($85.6 billion) but “this won’t happen. I know that for sure,” he said, adding that the ministry was now considering if it could adjust and actually reach its target.

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The official said the problem was not in tax receipts in the current year, where the shortfall is expected to be between 2 billion and 3 billion shekels. “If we were preparing the 2019 budget now, there wouldn’t be a problem, but we passed it nine months ago and the figures have changed,” the official said.

On Tuesday, Kahlon spoke to Haaretz before a meeting of Knesset members of his Kulanu party. “There is no prediction at the moment for the 2019 budget,” he said. “There will be one in the coming weeks. Rest assured, there’s no special problem in collection” of taxes.

He added: “In 2019 there will be huge investments. There will be exits. I’ve never exceeded the budget even once and I’ve never exceeded the deficit. People are arguing about something that can’t be checked.”

The Finance Ministry has gone on the offensive in recent days to play down price hikes about to go into effect for electricity, water, municipal taxes and many food products. Kahlon and his director general, Shai Babad, were interviewed Tuesday on Kan Bet public radio and Army Radio.

In one of the interviews Kahlon said: “The situation of the citizen has improved significantly .... The cost-of-living index has gone down, and therefore so have prices.”

The senior treasury official, however, told Haaretz: “The politicians have to show achievements to the people even if they’re not correct. As for me, I would never do a subsidy on bread.”

Still, the official said that “if you check all the data and what has happened with the cost of living and disposable income over the past three years, the situation is good. We’ve lowered income tax at the lower levels.”

Regarding the planned rise in electricity prices, the official said the Finance Ministry was seeking ways to limit the move. “If we can influence the outside entities, we’ll do it,” he said. “We’re working on steps in this matter.”

The official rejected claims by other ministry officials that the accountant general was working in roundabout ways to put off payments until 2019, while the Tax Authority wants to move up tax data to the current month as a way to shrink the deficit figures.

“In the meeting of the leadership the directive is no games,” the official said. “If there are expenses that don’t need to be paid out, we’ll stop. We won’t move things from one year to another or play with moving taxes up, especially when we know there’s a problem in 2019.”