The cabinet has unanimously approved the Locker committee recommendations to limit the use of cash in Israel. The proposal, which will now be brought for Knesset approval in order to become law, calls for limiting the use of cash or checks and encouraging the use of electronic means of payment.
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This plan is ultimately intended to limit the shadow economy. Using cash eases tax evasion, money laundering and other criminal offenses including terror funding, as it is harder to track and easier to hide cash transactions from the authorities. Checks are also considered harder to trace than electronic transactions.
The recommendations call for setting a maximum for cash transactions, and for banning issuing or receiving a blank check. Check transactions will be capped at 1 million shekels.
The proposal, which has the backing of Bank of Israel Governor Karnit Flug, also calls for increasing the use of debit cards and cutting the fees they incur.
Prime Minister’s Office Director General Harel Locker, who headed the committee, noted that an estimated one-fifth of Israel’s economy is off the books. As a result, the state is losing an estimated 40 billion to 50 billion shekels in tax revenues every year – a sum equal nearly the entire defense or education budget, he noted.