Finance Ministry Predicting 3.5% Growth for Israel's Economy in 2013-14

The Finance Ministry is projecting tax revenues this year of about NIS 240 billion and higher receipts in 2014.

Officials from the Finance Ministry will Sunday present their growth forecasts for the economy and projections for state revenues to the Prime Minister’s Office for this year and next. The working assumption at the Finance Ministry is that the Israeli economy will grow about 3.5% both this year and next, including about 1% economic growth from the major offshore gas supplies in Israel’s waters that are expected to come onto the market in April or May. The new gas is expected to have a negligible impact initially on state tax revenues, however.

The Finance Ministry is projecting tax revenues this year of about NIS 240 billion and higher receipts in 2014. The state’s revenue target for all of this year will be tough to meet unless the pace of tax collection increases.

For all of 2012, the state took in just NIS 218.6 billion in taxes.

The government actually took in more than it spent last month, but this is typical for the month of January. Last month’s spending surplus was about NIS 2.6 billion and total tax revenues for the month amounted to NIS 21.4 billion, the Finance Ministry announced Thursday.

Treasury officials say last month’s tax revenue figure was actually higher than the NIS 20.4 billion they had anticipated but 9.1% less, in inflation-adjusted terms, than January 2012. The drop in January tax receipts compared to January 2012 resulted from the fact that revenues last year were boosted by profit-taking on securities and dividend distribution before a change in tax laws went into effect, ministry officials explained.

Sunday’s meeting between Finance Ministry officials and staff from the Prime Minister’s Office is considered an important step in developing the 2013 budget. A number of senior officials from the Finance Ministry and Netanyahu’s office will be in attendance.

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