Economists at Bank Leumi (TASE: LUMI) warn that the government's current tax revenue estimate is much too optimistic, and that actual collections will be more than NIS 30 billion lower.
In its weekly review, Leumi notes that along with high government expenditure, tax collections continued to drop in December. While tax revenues have been falling for several months, the fourth quarter of 2008, and December in particular, was particularly bad.
The economists claim that the tax revenue estimate, NIS 189.2 billion, on which the 2009 budget was based, is much too high, since it was based on economic activity from the first half of 2008 a level to which the economy is not expected to return in 2009.
Leumi estimates tax revenues to be close to a monthly average of NIS 14 billion, which translates to a shortfall of more than NIS 30 billion from the official estimate over the coming year.
In line with its figures, the bank sees the budget deficit reaching 5%, or more, of GDP. This is without even taking into account the increased expenses from the fighting against Hamas in Gaza, and the need to stimulate economic activity.
Leumi also says that the trade deficit, which ballooned 35% in 2008, rose and fell in line with oil prices. They currently expect no change in the volume of exports or imports in 2009, and in dollar terms for both to shrink. This is derived from expectations of a global recession, and a sharp slowdown in Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on January 15, 2009
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