The Bank of Israel warned that a tax targeting profits of a specific sector contradicts the principles of the taxation policy, creates uncertainty and might even deter investors.
Israeli Finance Minister Bezalel Smotrich has reportedly proposed a plan to increase taxes on bank profits from its current rate of 17 percent to 26 percent in 2024 and 2025 amid the ongoing Israeli assault on the Gaza Strip.
According to the Israeli business daily, Globes, the proposal states that it is “part of the government’s steps to make adjustments in order to meet with the fiscal frameworks for 2024 and beyond for expenses caused by the Swords of Iron War…”
PAID post: Israel proposes taxing bank profits to pay for the war
Isr Minister of Finance Bezalel Smotrich is proposing a plan to increase the tax on bank profits to fund the ongoing war. The plan would see the tax on bank profits rise from its current rate of 17% to 26% in 2024… pic.twitter.com/W0KcJmAKxL
— MENA Unleashed (@MENAUnleashed) January 15, 2024
Adding that “(We decided) that according to the instructions of the VAT Law 1975, in tax years 2024 and 2025, a salary tax at a rate of 17% and profit tax at a rate of 26% will be imposed.”
The Finance Ministry forecasts that the increase in the tax rate will result in additional revenue of about NIS 1.4 billion ($378.4 million) in each of the next two years.
However, the Bank of Israel warned that a tax targeting profits of a specific sector contradicts the principles of the taxation policy, creates uncertainty and might even deter investors.
The Finance Ministry estimates the cost of the Gaza war in the budget proposal for the year 2024 to be around 85 billion shekels ($24 billion), amid concerns of a significant rise in the budget deficit, reports the Anadolu News agency.
The financial cost of war for Israel:
“The war .. will come with a fiscal price tag estimated at .. $48 billion in 2023-2024
..
Israel will likely be on the hook for two-thirds of the total costs [ie $32bn]
..
with the US paying for the rest [ie $16bn]”https://t.co/ziSmZWgfQz— Ziad Daoud (@ZiadMDaoud) November 23, 2023
The ministry, according to a draft set for a vote on Sunday evening, reportedly mentioned that the cost could decrease to 70 billion shekels ($19 billion) if US aid is taken into account.
As per the budget proposal, the fiscal deficit ceiling will be raised from previous estimates of 2.25 percent of the Gross Domestic Product to 6.6 percent, the report adds.
According to Gaza’s Ministry of Health, 24,100 Palestinians have been killed, and 60,834 wounded in Israel’s ongoing genocide in Gaza starting on October 7.
Palestinian and international estimates say that the majority of those killed and wounded are women and children.
(PC, Anadolu)
