Israel's Revenue Collections Continue To Slump

by Robert Lee, Tax-News.com, London

05 December 2001

As the political and security situation in Israel worsens, newly released Ministry of Finance figures have revealed that the government's revenue collection is suffering, partly as a result of recent events in the United States and at home, and partly as a result of the global economic downturn.

The Ministry revealed that last month, state tax revenue amounted to around NIS 11.6 billion, which equates to a 1.5% real decline on November 2000, and for the year so far, government revenue collections have shown a real decline of around 1.4%.

According to Finance Ministry reports, the decline in revenues from income tax and real estate taxation have been particularly steep, with the latter suffering as a result of a market slump. However, it is also thought that the Rabinovitch Committee recommendations for tax relief measures in the sector have caused many builders, investors and contractors to postpone the closure of deals, a factor which has adversely affected revenue collection figures.

Although VAT and customs collection showed an increase in November over the same period last year, the Ministry pointed out that the NIS 4.8 billion figure included deferred VAT refunds from the previous month. Therefore, in real terms, the division's revenues were effectively unchanged, and over the year have actually shown a 1% decline in real terms.

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