Exceptionally high tax collection in January led to a fiscal surplus of NIS 3.9 billion. The main reason was a sharp rise in collection of purchase tax on cars. Minister of Finance Moshe Kahlon promised recently that if the surpluses continued he would cut taxes, and this promise will now be put to the test.
"The surplus in January reflects especially high tax revenues," the Ministry of Finance announcement says. The 2016 budget envisages an annual deficit of 35 billion, or 2.9% of GDP. The deficit over the past twelve months represents 2.2% of GDP.
Tax collection in January totaled NIS 27.4 billion, 8% more than in January last year. Revenues from direct taxes rose 4%, to NIS 13.7 billion, but the big story is indirect taxes, revenues from which shot up 17% to NIS 13.2 billion.
It was the motor vehicles market that pushed tax collection up in January. According to the Ministry of Finance, most of the growth in indirect tax collection stemmed from a high level of car imports in January this year, compared with a low level last year because imports were brought forward to December 2014 in anticipation of the revision of the environmental taxation formula.
Purchase tax revenues soared 79% to NIS 1.9 billion, the reason being a 133% jump in the motor vehicles item.
There was also a 36% rise in collection of taxes on cigarettes, a 7% in collection of VAT (NIS 9.3 billion), a 29% jump in real estate taxes (NIS 936 million), and a 9% rise in collection of fuel tax (NIS 1.64 billion).
Published by Globes [online], Israel business news - www.globes-online.com - on February 8, 2016
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