(photo credit: REUTERS)
The Knesset on Monday passed the first reading of a bill to help limit the use of cash. The bill, sponsored by Finance Minister Moshe Kahlon, is intended to fight money laundering and tax evasion.
“The bill makes way for a war on crime and money laundering, while broadening the tax base without having to increase taxes and without interfering in people’s daily routines,” said Kahlon.
A Visa-sponsored study released in 2013 estimated that some NIS 185 billion worth of transactions happened off the books in Israel each year, meaning the government was missing out on billions of shekels each year from under- the-table cash transactions. A Bank of Israel study noted that in 2012, Israelis withdrew NIS 205b. in cash from banks, but spent only NIS 139b. on their credit cards, indicating that cash was far more prevalent in commerce.
The bill would put a limit of NIS 10,000 on cash transactions for businesses, a ceiling that would gradually fall to NIS 5,000. Cash transactions between private parties will be limited to NIS 50,000, which would drop to NIS 15,000. Cash transactions above those thresholds would be subject to fines.
Tourists would not be limited in their cash purchases, but merchants who sell more than NIS 25,000 worth of goods to a tourist would be required to report the sale to the Tax Authority.
Acceptable alternative methods of payment would be cash transfers, debit cards, and pre-loaded payment cards and checks. Cashier’s checks, which work like cash, would be subject to similar restrictions.
“This is a proportionate step, which balances between the citizens’ need for cash for daily functioning and limiting the use of this form of payment for the purpose of hiding illegitimate trans - actions from the Tax Authority,” said authority director Moshe Asher, who directed the committee Prime Minister Benjamin Netanyahu appointed in 2013 to make recommendations on the topic.
The Bank of Israel’s supervisor of banks, David Zaken, who was also a member of the committee, has already pushed forward a regulation forcing banks to issue debit cards free of charge to customers, in line with the commit - tee’s proposals.