Israel’s fiscal deficit fell sharply from 6.9% of GDP in the 12 months from the end of December 2024 to 5.8% (NIS 115 billion) 12 months from the end of January 2025. .
The improvement in the fiscal deficit follows the all-time record record for the state’s 63.1 billion NIS in January, up 30% from previous January 2022 records.
January 2025 itself ended with a fiscal surplus of NIS 23.2 billion. January has traditionally been a strong accounting month for the Ministry of Finance, with a surplus recorded annually since 2022.
This year, revenues for January rose primarily due to the surge in financial transactions and operations before various Treasury measures, including the VAT hike, the new surtax, and the locked profits law, were enacted. did. At the same time, government spending parties were also curtailed. This is because the year began without an approved state budget that would limit government ministries spending.
Jump to direct tax collection
The state’s exceptional revenue in January was based on a jump of 60.9% of direct tax collection compared to January 2024, the early months of the war. A key factor in the jump was the increase in dividend payments submitted by businesses and wealthy people at the end of 2024 to avoid the new Surtax that came into effect in early 2025. The NIS 7.5 billion shekel collection exceeds the usual monthly average.
Indirect taxes also recorded a significant increase of 22.5%. As a result, it arose from the public, especially since it offered to buy in December 2024 before VAT increased. At the same time, purchasing in December before the green tax update on electric vehicles and the rise in car prices actually reduced revenue from the vehicle purchase tax in January.
Decline of defense spending
On the spending side, the government reduced NIS 39.9 billion by 3.5% in January, down 3.5% from January 2024. That decline, among other things, saw a 23% decrease in defense spending compared to the war last year. It was authentic.
The spending control is also attributed to ongoing budget restrictions, allowing for NIS 43.6 billion NIS monthly spending.
Related Articles
Israel’s fiscal deficit falls below 7%
The Treasury stresses that there may be a slower tax collection in the coming months as the majority of the deficit improvements will advance revenues that were supposed to be received in 2025. However, even after deducting one-off effects, a true increase of 21% has been recorded in tax revenue compared to last January, indicating a recovery in economic activity despite the war.
Published by Globes, Israel Business News -en.globes.co.il- February 10, 2025.
©Copyright of Globals Publisher Itonut (1983) Ltd., 2025.
