Tax Revenues in Israel Are Coming in Even Higher Than Revised Forecasts

Corrected for inflation, the figure represents a 5.2% jump over the January to September period last year.

shekels
Reuters

Over the first nine months of the year, the government collected a record 216.1 billion shekels ($57 billion) in tax revenue. Corrected for inflation, the figure represents a 5.2% jump over the January to September period last year.

In September alone, the state took in 25.3 billion shekels in tax revenues 12.3% more after inflation than in September 2015. The timing of the fall Jewish holidays served to boost September taxes collections compared to last year, however, because the holidays fell in September last year, meaning that there were fewer business days, while this year the holiday season is in October.

This year has been one of an embarrassment of riches of sorts, in which revenue forecasts have been revised upwards and even then the projections are being surpassed. Data released by the Finance Ministry on Sundashow that for the first half of the year, tax revenue exceeded the original ministry projections by about four billion shekels. As a result, in mid-July the ministry’s chief economist, Yoel Naveh, revised his tax projection for the entire year upwards by 4.6 billion shekels to 282.5 billion.

But economists are now projecting that in practice, the Tax Authority will finish the year with total tax receipts of about 288.5 billion, exceeding even the revised tax collection target by six billion shekels. The newest data are particularly good news for top Finance Ministry officials who had previously seen the pace of tax collections stall. The brisk pace of collections also has helped the government to impose spending discipline with respect to the cost side of the budget.

In the midst of the rising tide of tax monies, in the period from July through September, the Tax Authority took in 1.2 billion shekels more than even the revised forecast provided for, and compared to the original projection, 5.8 billion shekels more has been received in taxes than initially forecast.

Tax revenue has been steadily growing at an annual average rate of between 6% and 7%, the Finance Ministry said.

In September, the government took in 12.2 billion shekels in direct taxes – from income taxes, corporate tax and land taxes. After correcting for inflation, that’s 9.5% more than in September 2015. At 110.1 billion shekels, for the first nine months of 2016, revenue from direct taxes were also 5.3% higher this year than last.

When it comes to indirect taxes, such as value added tax, purchase taxes and customs duties, September saw tax revenue of 12.5 billion shekels, which is 13.3% higher after inflation than September 2015. For the first nine months of the year, the Tax Authority received 100.6 billion shekels in indirect tax revenues, up 5% in real terms after inflation compared to last year.