Israel’s state tax revenues were 11.8 billion Israeli shekels ($2.5 billion) in October 2002. Revenues of the Customs and Value Added Tax (VAT) Division increased relative to recent months; those of the Income Tax Division showed no significant change.
Collections in October 2002 were one percent lower in real terms than in October 2001, when a gradual decline in collection began. The revenue data give evidence of the continued recession and the stabilization of collections at a low level.
Importantly, no inference should be drawn from the figures for one month because tax collections are severely volatile, for reasons including the timing of tax refunds and a concentration of festival and observance days.
State tax revenues since the beginning of 2002 are NIS 123.5 billion - five percent lower in real terms than the year-earlier period and pursuant to a three percent real decrease in the last quarter of 2001 relative to the last quarter of 2000.
The revenue slump and the increase in defense expenditure prompted the government to resolve, in April, to narrow the budget deficit by cutting expenditures and raising taxes. By the end of April, increases in the Diesel fuel excise tax and purchase tax on cigarettes went into effect, and on June the rate of VAT was raised from 17 percent to 18 percent.
Net of these changes and net of differentials in the timing of tax refunds, collections in January-October 2002 were six percent lower in real terms - 11 percent real decrease at the Income Tax Division and one percent real increase at the Customs and VAT Division.
Collections of the Income Tax and Real-Estate Tax Division in the first ten months of 2002 were NIS 67.3 billion, 11 percent lower in real terms than in the first 10 months of 2002. Notably, the Division's revenues increased by 20 percent in real terms in 2000 versus 1999.
In the first nine months of 2001, Division revenues expanded by another one percent in real terms relative to the corresponding period in 2000. From October 2001 to the current month, Division revenues stabilized at a low level that reflects a real decrease of more than 10 percent relative to the 2000-2001 level.
The Customs and Value Added Tax Division collected NIS 53 billion in January-October 2002, five percent more in real terms than in the year-earlier period. The Division's revenues during this time included an extra NIS 1.3 billion from the increases in Diesel fuel excise, purchase tax on cigarettes, and VAT.
Due to the effects of legislative changes and the postponement of VAT refunds due to labor sanctions at the Division, collections since the beginning of the year increased by one percent in real terms, despite the decline in Gross Domestic Product (GDP) and the standstill in private consumption. Collection of government fees was one percent greater in January-October 2002 than in the first 10 months of 2001. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
