VAT increase in Israel in 2025 – how will it affect the population

by times news cr

2024-07-09 12:39:39

Early next year, Israel plans to raise VAT (value added tax) from 17 to 18 percent. It has become known which Israelis will suffer the most from the increase in this tax.

Mako reports this.

VAT is a tax that every citizen pays when they make a purchase, regardless of their income. It is included in the price of goods and services for the end consumer. But its increase can lead to wealth inequality in society. First of all, it will hit the poorest sections of the population.

The department’s chief economist published a document showing what share of Israelis’ income is indirect taxes in different deciles. For example, the bottom decile – 10 percent of citizens with low incomes – pays about 42 percent of their income in indirect taxes. In the next decile, this figure is 26 percent, and in the top decile – 9 percent.

Looking specifically at VAT, the poorest Israelis (from the bottom decile) spend 28 percent of their income on it. The report says that for the bottom six deciles, VAT is the highest of all taxes.

“Cursor” wrote earlier that a Tel Aviv resident hid millions in income from the tax authorities.

2024-07-09 12:39:39

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