January 2009 tax revenues totaled NIS 14.3 billion, down a nominal 16.4% compared with January 2008, the Ministry of Finance announced today. The figures are consistent with both the ministry and the Bank of Israel's forecasts, which state that the economy has now entered a recession, which will reduce tax receipts and cause the budget deficit to balloon.
Direct tax revenues (income and company taxes) fell 18% in real terms to NIS 7.2 billion in January from NIS 9 billion in January last year. Indirect tax revenues (VAT and customs) fell 19% in real terms to NIS 6.7 billion in January from NIS 7.6 billion in the corresponding month.
The government is operating with an approved budget for 2009, after the Knesset failed to pass the budget law last year. The government is therefore operating on the basis of 1/12 monthly increments of the 2008 budget, amounting to NIS 25.8 billion per month.
The government's spending plan for January totaled NIS 17.5 billion, including NIS 12 billion spending by ministries and NIS 5.6 billion debt repayments. The planning aims at keeping a sufficient reserve to meet the huge NIS 33 billion in debt repayments due in February and March.
The balance derived from the tax revenues and government spending amounts to a surplus of about NIS 1.5 billion. However, the Office of the Accountant General argues that this surplus will turn into a large deficit because of the increase in debt repayments and government bond redemptions in February. The government's accounts will again balance in March.
Capital gains tax revenues totaled NIS 160 million in January, 45% less than in January 2008, reflecting the market crisis. Income tax revenues fell 16.4% to NIS 3 billion from NIS 3.5 billion, while company tax revenues fell 20%, reflecting the slowdown in economic activity.
Published by Globes [online], Israel business news - www.globes-online.com - on February 5, 2009
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