In 2023, Israel’s state treasury lost a staggering 83 billion shekels due to various tax breaks. This amount was estimated by Shmuel Abramson, the chief auditor of the Ministry of Finance, who attributed it to benefits provided to different industries and groups within the population.
The largest portion of this missing revenue, 24.3 billion shekels, was due to an exemption from income tax on income contributed to pension savings. Additionally, 9.6 billion shekels were allocated to parents through child tax credits and another 7.4 billion shekels were lost due to an exemption from income tax on contributions to advanced training funds.
Corporations also received 5 billion shekels in benefits under the capital investment incentive law. The exemption of housing from the tax on the increase in real estate value resulted in a loss of 4.2 billion shekels for the state while VAT exemptions on fruits and vegetables cost the state 4 billion shekels, which is a benefit that the Ministry of Finance has been unable to revoke despite ongoing efforts.
The tax department struggled to collect 3 billion shekels from rental income and another 2.6 billion shekels were not reaching the state treasury due to benefits provided to residents of peripheral settlements and security personnel. Despite these challenges, ongoing efforts continue with reforms aimed at eliminating costly tax breaks.
In summary, Israel’s state treasury lost a significant amount of revenue in 2023 primarily due to various tax breaks such as exemptions and deductions granted by different government policies aimed at promoting economic growth or supporting specific groups such as pensioners or families with children. Efforts are being made by the Ministry of Finance and other government agencies to address these issues and eliminate them in order
