Deficit swells to NIS 1.7 billion so far
Until the government passes a new budget, the expenditures will remain fixed, regardless of the tax revenues.
The Jerusalem Post Photo: Bloomberg
The budget deficit for the first two months of 2013 has already exceeded that of
the same period in 2012, according to numbers released by the Finance Ministry
In February, the government spent NIS 4.3 billion more than
it took in. When added to the NIS 2.6b. budget surplus from January (a month
that often sees more intakes than expenditures), the total deficit for the year
stood at NIS 1.7b. In the same two-month period in 2012, the government had a
NIS 2.9b. surplus.
In 2012, the 4.2 percent annual deficit caused a
political stir, setting into effect legal requirements to cut spending and raise
revenue to bring the deficit in line.
While there were significant
increases in income tax in January and February, the Israel Tax Authority’s
revenues fell 9% (in real terms, which takes inflation into account) from the
same period in 2012. NIS 2.3b. worth of tax refunds – which at triple the amount
of last February, the ministry said, were unusually high – contributed to the
lower overall revenue.
In addition, expenditures in government offices
rose 5.4% over the same period last year, while expenditures on civil services
Defense spending only rose 0.5%.
The problem is
unlikely to go away anytime soon. While new tax policies went into effect at the
start of the year, the budget is currently operating on a one-to-12 system,
which mimics the previous year’s budget on a month-to-month basis.
the government passes a new budget, the expenditures will remain fixed,
regardless of the tax revenues. Once a new government is formed, it has 45 days
to pass a budget for the year, though Prime Minister Binyamin Netanyahu has
signaled he wants a legal amendment to extend that time frame to 90
That could mean a new budget, and the mandatory spending cuts and
revenue changes needed to bring the deficit down, won’t be put into effect until