Updated budget performance figures published today by the Ministry of Finance show that state tax revenues jumped 10% in February, compared with February 2016. State tax revenues totaled NIS 51.8 billion in January-February, 6.4% more than in the corresponding period last year.
Minister of Finance Moshe Kahlon promised at the beginning of the year that he would lower taxes again if tax revenue figures continue to exceed the forecasts. Ministry of Finance sources predicted that Kahlon would decide the matter according to the figures for the first quarter (as he did last year), and it therefore only remains to wait for the March figures. Kahlon plans to tackle income tax and VAT this time, after having cut VAT by 1% two years ago.
The budget deficit for the past 12 months is at a low of 2.1%, while spending by the civilian ministries continues to rise at a slower than expected pace (5.2%, compared with a planned 5.9% increase). Defense spending, on the other hand, soared 23.9%, but the Ministry of Finance attributes this to "technical changes in the structure of the budget and the distribution of its performance," asserting that this "does not necessarily indicate a deviation from the annual budget framework" by the Ministry of Defense.
Revenues from almost all tax instruments rose - a positive indicator showing that economic growth is continuing. Even the capital market is showing signs of life, with a 95% rise in tax revenues. Revenues from purchase tax on vehicles, on the other hand, plunged 42%, compared with February 2016, because many people hurried to buy cars by the end of end of 2016.
Published by Globes [online], Israel Business News - www.globes-online.com - on March 8, 2017
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