Tax Collection Hits Record for First 10 Months of Year

Defense Ministry biggest beneficiary as Tax Authority collects 7.5% more taxes compared to same period in 2014.

Emil Salman

The Israel Tax Authority collected a record 227.2 billion shekels ($58.6 billion) in taxes in the first 10 months of the year, an increase of 7.5% compared to the same period in 2014.

Last month alone, the authority collected 20.6 billion shekels in taxes, 3.9% more than October 2014 (all cited figures take inflation into account).

The government’s fiscal year is the same as the calendar year. As a result of this unexpected tax bonanza, as the year nears an end the public purse is considered in very good shape – well beyond what the Finance Ministry expected earlier.

In the first 10 months of 2014, the government ran an operational budget deficit of 13.1 billion shekels, while this year the figure was 7.4 billion shekels for the same period. The deficit projected in the 2015 state budget – which is yet to be formally passed following the Knesset election last March and the formation of a new government – is 31.4 billion shekels. The budget is expected to be passed on November 19.

The current tax collection picture will enable the Finance Ministry to greatly expand allocations to the various ministries as the year nears its end, and indications of this were already seen last month. A major beneficiary is the Defense Ministry, which has received billions in additional funding.

The government’s operating deficit last month was 3.5 billion shekels, the treasury reported. The deficit for the 12 months from November 2014 to October 2015 was about 23 billion shekels, or about 2.1% of the country’s gross domestic product. By comparison, the budget deficit in the proposed 2015 budget was set at 2.9%.

The government has spent 217.1 billion shekels for the first 10 months of the year, up 5.6% over the same period last year – including an 8.1% increase in defense spending. Between January and October 2015, the government has collected 115.2 billion shekels in direct taxes (including income taxes, corporate taxes and land taxes). As for indirect taxes in the same period, 106.5 billion shekels have been received, for levies such as value-added tax, purchase tax and customs duties.

All told, the government’s tax receipts are running 8.9 billion shekels higher than initially projected for the period from January through July.