Israel posts zero 12-month deficit for first time since 2008

Israel’s cumulative fiscal deficit for the twelve months to the end of May was zero. This is the first time the government has recorded a zero deficit for a twelve month period since 2008. According to initial estimates released by the Central Bureau of Statistics today, in May itself there was a NIS 1.4 billion surplus. The fiscal surplus for 2022 to date is NIS 33.3 billion. In the corresponding period of 2021 there was a NIS 34.8 billion deficit.

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State revenues for the first five months of 2022 totaled NIS 206.3 billion, 25.4% more than in the corresponding period of 2021. The government spent NIS 173 billion in the first five months of this year, 13.2% less than in the corresponding period.

May was the fifth month in succession in which there was a fiscal surplus. There has not been such a run of monthly surpluses since 2007. The cumulative deficit figures show a 0.5% fall in the twelve months to the end of May from the twelve months to the end of April.

The Ministry of Finance explains the figures by the fact that alongside steady, significant growth in tax receipts as a percentage of GDP, state expenditure has fallen, mainly because of the ending of aid programs connected to the Covid-19 pandemic.

In the first five months of this year, the government spent NIS 3.6 billion on such aid programs, which compares with NIS 32.7 billion in the corresponding period of 2021. These are impressive numbers, but at the same time it should be borne in mind that the compensation that the government promised to businesses for losses caused by the Omicron Covid variant has not yet been transferred to those entitled to it, and is not reflected in the fiscal numbers.

Taxation related to real estate almost doubled in May. Net receipts from these taxes totaled NIS 2.7 billion last month, which compares with NIS 1.4 billion in May 2021. Capital gains tax collection rose by 81%, while purchase tax collection rose by 79%.

There was also a jump in income tax collection from self-employed people and from companies. State revenues under this heading totaled NIS 8.9 billion in May, which compares with NIS 6.4 billion in May last year.

Published by Globes, Israel business news – en.globes.co.il – on June 9, 2022.

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