Israel Tax Revenues Jump 13.3% to ₪443.7 Billion as Deficit Narrows
Israel's state tax revenues surged 13.3% to ₪443.7 billion in the first nine months of the year, significantly narrowing the budget deficit while civilian ministry spending remained virtually unchanged.
Israel's state tax revenues surged by 13.3% since the beginning of the year, reaching ₪443.7 billion—an increase of ₪52 billion compared to the same period last year. According to a report published by the Ministry of Finance, even after adjusting for inflation, tax policy changes, and exceptional payments, the real increase stands at 8.8%. While state tax collection has expanded significantly, civilian ministry expenditures have remained virtually flat.
September Tax Collection and Holiday Impact
In September alone, the state collected ₪46.1 billion in taxes, marking a 6% increase compared to September of last year. Ministry of Finance officials explained that the figure could have been even higher, but Jewish holiday timings pushed some tax payments into October, including roughly ₪500 million in VAT and hundreds of millions in other levies.
The report shows that corporations paid 12% more in taxes this September than last year, while self-employed collections dropped by 10% due to holiday-related payment deferrals. Looking at the broader picture, however, tax collection from the self-employed jumped by 15% from January through September, outpacing the 7% growth in corporate tax receipts.
State tax revenues surged by 13.3% since the beginning of the year, reaching ₪443.7 billion, while civilian ministry expenditures rose by a mere 0.3%.
Real Estate and Capital Markets
The real estate sector saw a continued contraction in state tax revenue. September real estate tax revenues dropped 18% to ₪1.3 billion, compared to ₪1.6 billion last year. Purchase tax revenues fell by 16%, while betterment tax revenues declined by 20%. Overall, real estate tax revenues for the first nine months of the year are down 3%.
Conversely, Value Added Tax (VAT) revenues continue to rise steadily. September VAT collections reached ₪14.7 billion—an 8% year-on-year increase. Capital market tax revenues dipped by 9% in September, though they remain up 53% overall for the first three quarters of the year.
Budget Deficit Trends
Government expenditures rose by just 3.4% since the beginning of the year. Defense spending climbed by 9.7%, whereas civilian ministry spending—including education, health, and welfare—inched up by a mere 0.3%.
This strong revenue growth paired with restrained civilian spending helped narrow the cumulative budget deficit to ₪29.5 billion, down sharply from ₪56.3 billion during the same period last year. The 12-month trailing deficit held steady at 3.2% of GDP, though the Ministry of Finance anticipates increased spending momentum toward the end of the year.
