2023-07-09 15:15:26
The Ministry of Finance reports today (Sunday) on a real decrease of 7% in the state’s tax revenues in June, compared to June 2023, at uniform rates. Since the beginning of the year, tax revenues have decreased by 4.5% compared to the corresponding period.
At the same time, the budget deficit remains historically very low: the accumulated deficit in the last 12 months is about 15.4 billion shekels, which is 0.9% of GDP. Since the beginning of the year, there is a cumulative surplus of about NIS 6.7 billion.
The monthly deficit was about NIS 6.2 billion compared to June last year, which ended with a deficit of about NIS 1.5 billion.
Government expenditures since the beginning of the year amounted to approximately NIS 223.6 billion, compared to NIS 209.3 billion in the corresponding period last year. This is a cumulative increase of about 6.9% compared to the corresponding period last year.
This rate of spending is low compared to the entire state budget, which stands at 484 billion NIS, so that after half of the year the government ministries spent only 46% percent of the budget. This rate was affected by the budgetary restraint at the beginning of the year, when the continuation budget for 2022 came into effect, which severely limits the ability to spend of the ministries The transfer of the government’s budget enables the increase in the spending rate of the ministries.
Despite the slowdown: tax collection meets the forecast
Collection from direct taxes decreased by 8% compared to last year, collection from indirect taxes decreased by 7% and collection from fees increased by 2%. In nominal terms, this is a smaller change – the revenues of the Tax Authority in June 2023 amounted to NIS 31.0 billion compared to NIS 32.7 billion in the same period last year, a decrease of 5.2%.
The decrease in revenues from direct taxes was mainly due to a sharp decrease in revenues from real estate taxes and an increase in tax refunds. The decrease in indirect tax revenues is explained in large part by a decrease in imports, but also by a reduction in activity in the real estate market.
The state’s tax revenue collection in the second quarter of 2023 amounted to NIS 102.3 billion, similar to the updated quarterly forecast of the Ministry of Finance. The Treasury sees that the downward trend in tax collection has stalled in the last two months, but it is still too early to determine if this is a turning point.
In the months of January-June 2023, revenues amounted to NIS 216.0 billion compared to NIS 227.3 billion in the corresponding period last year. At uniform tax rates, tax revenues decreased by 8%. Revenues from direct taxes decreased by 10% and revenues from indirect taxes decreased by 5% compared to January-June 2022. Revenues from fees increased by 4%. The decrease in January – June 2023 is partly explained by high revenues in the first half of 2022.
Real estate taxation plummeted and income tax returns soared
Real Estate Taxation – The net revenue from real estate taxation amounted to NIS 1.1 billion in June 2023, compared to NIS 2.5 billion in June 2022, a real decrease of 56%. This is the lowest level of revenue from real estate taxes since the beginning of 2021. The collection of fine tax decreased by 52 % and the collection of purchase tax decreased by 61%, compared to the corresponding period last year. Cumulatively since the beginning of the year, the income from real estate taxes decreased by 42%.
In June 2023, income tax refunds and deductions totaled 1.8 billion NIS, compared to 1.3 billion NIS in June 2022, an increase of 32% in real terms. In the first half of 2023, the returns increased by 16%.
In June 2023, the revenue from the import purchase tax amounted to approximately 1.8 billion NIS. This is a real decrease of 8% compared to June 2022, which results, among other things, from the cancellation of the purchase tax on disposable utensils and sweet drinks. Cumulatively, in January-June 2023, revenue from the import purchase tax increased at 16% at uniform tax rates.The main increase is due to an increase in vehicle imports.
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