Israel Prime Minister Bans Tax Increases Amid Growing War Spending; Government’s Focus is on Stabilizing Finances without Burdening Taxpayers Further

In response to the growing war-related spending, Prime Minister Benjamin Netanyahu has issued a directive prohibiting the Ministry of Finance from considering any tax increases until the end of 2024. This decision comes as the government seeks to prevent the deficit from growing.

The Ministry of Finance had been exploring various measures to maintain financial stability, including postponing a 1% VAT increase originally planned for January 2025 to July 2024 and eliminating the VAT exemption for online purchases abroad below $75. However, with the Prime Minister’s directive in place, these options are no longer under consideration.

Government economic adviser Avi Simhon emphasized that there is no possibility of agreeing to a tax hike at this time, especially as the economy shows signs of recovery and macroeconomic indicators point towards rapid improvement in the near future. The government’s focus is on stabilizing finances without burdening taxpayers further.

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