Prof. Avi Simhon: “Cancel the VAT increase if collection continues at a good pace”

“If the state’s revenues continue at this rate – the VAT increase will become unnecessary,” said today (Monday), the chairman of the National Economic Council, Professor Avi Simhon, in an interview with Gali IDF. Simhon, the prime minister’s senior advisor, visited the Bank of Israel and the ministry The Treasury is overconservatism.

According to Simhon, the percentage increase in VAT that should come into effect at the beginning of 2025 is expected to bring 6 billion shekels into the state coffers annually. Big expenses and they need to be financed.”

“So far we have collected 16 billion shekels more than expected. The VAT percentage is 6 billion shekels. If the collection will be above the forecast, why insist on raising the VAT?” added

Regarding the political feasibility of canceling the VAT increase, he said: “I don’t know what the Minister of Finance will choose to do, but the Budget Division and the Bank of Israel are always in favor of raising taxes. They are always on the conservative, safe side. The problem is that taxes hurt the economy, and an excess of conservatism hurts the economy.” Simhon noted that the economy is in better shape than the forecasts, especially in the high-tech sector.

In the last six months, the government collected taxes amounting to NIS 225.1 billion, while half of the collection target is NIS 209.8 billion. If collection continues at this rate, Israel will exceed the tax target by NIS 31 billion.

As part of the 2024 budget discussions, the government decided on an additional percentage to the VAT, so that it will rise from 17% to 18% at the beginning of 2025.