Political and economic officials are reportedly examining a proposal to raise Israel's VAT rate to 22.5%, a sharp increase that would drive up prices across a wide range of goods and services and worsen the cost-of-living crisis, according to a Thursday report. The discussion comes amid ongoing budget disputes and wartime spending pressures.
A Thursday report originating from a Hebrew the source indicates that political and economic decision-makers in Israel are examining a proposal to raise the value-added tax (VAT) rate to 22.5%, a steep increase from the current 18%. The report, which has not been confirmed by an official source, says the move would substantially raise the cost of living by increasing prices on a wide range of goods and services.
If enacted, the hike would mark the highest VAT rate in Israel's history, exceeding previous emergency-level proposals debated during the 2024-2026 wartime budget cycles. The discussions come as the Finance Ministry and Defense Ministry remain locked in a dispute over a requested 30 billion shekel defense budget increase, which the Treasury has previously threatened to offset via a 4.5% VAT rise, as The Zioneer reported.
The current report does not specify which faction proposed the 22.5% rate, whether it is under formal legislative consideration, or what timeline might apply. No official confirmation from the Finance Ministry, Knesset committees, or Prime Minister's Office has been released. The report remains a single-source, unconfirmed preliminary discussion at this stage.
2 developments
- DevelopingIMF recommends raising Israeli VAT to 18%, cutting vacation days and freezing tax brackets
- StrongKnesset advances bill to cut VAT to 17% amid push to ease cost of living
- DevelopingEconomic commentator argues direct distribution would be more efficient than a VAT cut
- DevelopingButter import prices surge 73% since market liberalization, Agriculture Ministry finds
Source and signal
A single-sourced dispatch is never rated Confirmed or Strong. Its Signal strengthens only when a second, independent source corroborates it.
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