Treasury mulls plan to hike VAT to 18.5%

By Investor Empires On Sep 3, 2024

The government has already agreed to raise VAT to 18% from January 1, 2025 as part of a special budget passed after the war began.

Israel’s Finance Ministry is considering a plan to raise VAT to 18.5% from its current 17%, if necessary, a source familiar with the matter told Globes. The government had already agreed to raise VAT to 18% as of January 1, 2025, as part of a special budget passed after the war began.

Today, Finance Minister Bezalel Smotrich presented his plans for the 2025 budget, which included a number of painful measures including a freeze on public sector wages, tax brackets, allowances and pensions, an increase in income tax on the lowest-paid workers, and a series of savings and rationalization measures in government ministries and the civil service totaling NIS 35 billion. However, he did not mention the proposed VAT increase.

Smotrich’s 2025 Budget Plan: Tough Measures to Pay for War

Smotrich has pledged to reduce the fiscal deficit to 4% of GDP. At the end of July 2024, the fiscal deficit stood at 8.1% of GDP, though Smotrich insists that the deficit will fall to the government’s forecast of 6.6% of GDP by the end of 2024.

This article was published in Globes, Israeli Business News – en.globes.co.il – on September 3, 2024.