"It's no secret that the 2009 budget shortfall is already NIS 4-7 billion, and that the deficit will amount to at least 2% of GDP, not 1%," a top Ministry of Finance official told "Globes" today. Israel Tax Authority data indicate that direct tax revenues (income and capital market taxes) have been shrinking since January. A few months ago, import taxes also began falling, and VAT revenues began falling in August.
The official added that the budget shortfall for 2008 amounts to a few billion shekels, and will reach NIS 7 billion in 2009, depending on GDP growth. The Ministry of Finance officially predicts NIS 729 billion GDP in 2009, reflecting 3.5% growth over 2008, a figure that already looks to be fantastical. Assuming the official 1% of GDP deficit target, next year's budget shortfall will reach NIS 7 billion.
The official said that the shortfall could reach NIS 11-12 billion, and if GDP growth falls below 3%, it could balloon to NIS 14-15 billion, giving a deficit of 2-2.5% of GDP.
The official concluded, "In view of these figures, there's no place to make another tax cut. We don’t have enough resources for it, and we also have a tax cut plan through 2010."
Published by Globes [online], Israel business news - www.globes-online.com - on September 15, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008