The International Monetary Fund recommends a series of tax increases in Israel, including raising the VAT rate to 18%, increasing national insurance payments, reducing annual vacation days, freezing income tax brackets, raising the surtax, and imposing tax on undistributed profits, according to a report by Channel 12's Yuval Sadeh.
The International Monetary Fund's latest policy recommendations for Israel, reported Wednesday by Channel 12 economic correspondent Yuval Sadeh, include a comprehensive set of tax hikes and benefit reductions aimed at addressing the country's rising defense expenditures. The IMF advises raising Israel's value-added tax (VAT) to 18%, increasing national insurance (Bituach Leumi) contributions, reducing annual vacation days from the current statutory minimum, freezing income tax brackets (effectively raising the tax burden through bracket creep), raising the surtax (mas yasaf) on high incomes, and imposing a tax on undistributed corporate profits.
As The Zioneer reported earlier Wednesday (15:59 Jerusalem), the IMF's annual country report warned that defense spending would remain high and that the labor supply would be constrained by military conscription and reduced availability of non-Israeli workers. The new tax recommendations build on that broader fiscal warning. The recommendations come amid ongoing debate in Israel over tax policy: the Knesset has been advancing a bill to cut VAT to 17% as a cost-of-living measure, though the bill—opposed by the Treasury—had not been enacted as of June 28.
The IMF's proposals are recommendations, not binding requirements, and would require legislation by the Knesset and government approval to take effect. No timeline or specific reception by Israeli officials has been reported in the current intake.
- DevelopingIMF annual report warns of prolonged high defense spending, labor constraints in Israel
- StrongKnesset advances bill to cut VAT to 17% amid push to ease cost of living
- StrongAnnual inflation steadies at 1.9% after governor signals rate-cut easing
- DevelopingTreasury objects to expanded tax-benefit proposals, cites ineffectiveness and budget strain
Source and signal
- Internal intake