17% of population pays 76% of taxes

On average, Israelis paid 20.6% in direct taxes, 13.4% in income tax and 7.6% on health and national insurance taxes.

May 19, 2013 22:57
1 minute read.
Ougoing finance minister Steinitz and incoming minister Lapid at office change over, March 19, 2013.

Lapid and Steinitz at Finance Ministry handover 370. (photo credit: Marc Israel Sellem/The Jerusalem Post)

Seventeen percent of Israel’s population paid over three-quarters of the direct taxes in 2008, while about half fell below the income-tax threshold, a report by the Finance Ministry’s State Revenue Administration revealed on Sunday.

The report – which used data from 2008, the last year of complete available data, and modeled estimates for 2011 and 2012 – found that the overall greatest contribution to the state’s direct tax revenues came from the second- highest tax bracket, in which 6.4% of the population paid out 30.9% of the total.

Only a third as many people – 1.8% – paid into the top-tax bracket, but the higher rate meant they represented 27.2% of the overall direct taxes collected.

Fully 43.7% of the population fell into the lowest tax brackets of 10% or less, and represented a mere 2.4% of the tax revenue.

The number of people who, due to the tax structure and various benefits given based on family status, fell below the income-tax threshold was 52.2% in 2010, 49.7% in 2011 and 52.3% in 2012.

On average, Israelis paid 20.6% in direct taxes, 13.4% in income tax and 7.6% on health and national insurance taxes.

Post-tax inequality according to the Gini index had dropped 2% in 2008, though it saw no such improvements through 2011, and experts expected similar stasis for 2012.

The report also showed a wide gender gap in income in 2008. On an hourly basis, women earned 21% less than men, though that figure did not account for differences in position or seniority. That figure was down from 36% in 1985, but exhibited no improvement over the previous decade.

Because men worked an average of 10 hours a week more than women, that gap increased to a net of 68% more in monthly income for men.

The progressive-tax structure narrowed that amount to 50.8% in 2011, the report said, and men’s income tax rates were on average double those of women. All these factors also led to smaller degrees of inequality between women than between men.

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