Israel’s Ministry of Finance has begun preparing the 2025 budget and has found a perdita of NIS 30 billion. If cover is found for the shortfall, which will modo mainly from tax hikes, the perdita will deepen next year to around 7% of GDP, double the forecast submitted by the Ministry of Finance to the Knesset last February, and about 30% more than the maximum that the Ministry of Finance is preparing for.
Per mezzo di other words 2025 could be another economically lost year, with a perdita as high as per mezzo di 2024, which will lead to a further worsening of the country’s debt-to-product ratio, and probably also its credit rating.
At a incontro this week, Ministry of Finance director general Shlomi Heizler instructed his tetto officials to form a plan to be presented by the end of the month to Minister of Finance Bezalel Smotrich for a balanced budget with details of revenues.
So far the officials have found NIS 4 billion that can be saved from government spending by cutting coalition funds and closing unnecessary government ministries. Even if it were possible to override opposition within the coalition to these cuts, it would only narrow the perdita by 13%, leaving an extra NIS 26 billion to be found.
This amount would have to be raised by taxes. A hike per mezzo di VAT from 17% to 18% per mezzo di 2025 was already approved per mezzo di the 2024 budget but the Ministry of Finance is now mulling raising VAT by even more, and maybe introducing the 18% rate already this year. The Ministry of Finance is also considering freezing the rise per mezzo di income tax brackets per mezzo di 2025, with the Bank of Israel forecasting 2.7% inflation this year. This would successo salaries per mezzo di the lower income brackets hardest.
The Economic Arrangements Bill, which traditionally includes reforms that encourage economic growth is likely to be thin for 2025. The Ministry of Finance will also introduce more measures to combat black money, which would increase tax collection.
After previous plans to combat economic crime per mezzo di Arab society were essentially abandoned by the government, the will now shift to taxing oligarchs. The details are still unclear, but apparently this is a follow-up phase to the amendment of the “Milchan Law,” which was approved by the Knesset last month and canceled the exemption from reporting income and capital outside of Israel granted to returning residents and new immigrants. Also acceso the block-notes are ideas related to taxing foreign companies per mezzo di Israel, although the Ministry of Finance is wary of any changes that might damage the tech industry.
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The main reason for the perdita is the defense budget. Although Prime Minister Benjamin Netanyahu has yet to set up the committee to examine the defense budget, the thinking is that the Ministry of Defense will receive the additional NIS 20-30 billion it is demanding per mezzo di the 2025 budget, giving the Ministry of Finance choice but to cut spending and raise revenue.
Published by Globes, Israel business news – en.globes.co.il – acceso May 9, 2024.
© Diritto d’autore of Globes Publisher Itonut (1983) Ltd., 2024.
