Tax Revenues in Israel Continue to Grow, With Another 2% Rise in July

In the first seven months of the year, the government has taken in 168.7 billion shekels, a 5.7% increase in real terms over the same period last year.

Finance Minister Moshe Kahlon, March 30, 2016.
Ofer Vaknin

The burgeoning level of the country’s tax revenues continued last month, with the Israel Tax Authority collecting 26.4 billion shekels ($6.9 billion), a figure that’s 2% higher than the figure for July 2015 after correcting for inflation.

In the first seven months of the year, the government has taken in 168.7 billion shekels, a 5.7% increase in real terms over the same period last year. Over the past three and a half years, tax receipts have shown annual growth of about 6%.

Of the July tax take, 13.4 billion shekels came from direct taxes (income tax, corporate tax and land taxes) and 12.4 billion shekels from indirect taxes such as value-added tax, purchase taxes and customs duties. Direct tax receipts for the first seven months of the year ran 6.8% higher than the same period last year, while the indirect tax take was 4.6% more, after correcting for inflation.

Finance Ministry figures released on Monday also showed that the government ran a 500-million-shekel budget surplus last month. For the first seven months, meanwhile, the government’s budget deficit was 2.6 billion shekels. The budget provides for a 35-billion-shekel budget for the entire year, or 2.9% of Israel’s gross domestic product. But for the past 12 months, from August 2015 through July 2016, the government ran a deficit equivalent to 2.2% of GDP. It’s expected that in actuality, the government will finish 2016 with a deficit coming in under 2.5% of GDP. Last year, the deficit represented less than 2.2% of Israel’s gross domestic product.