Data shows tax revenue dropped, deficit grew in April

Israel’s fiscal deficit widened to NIS 4.9 billion, or 0.3% of GDP, in April over the prior 12 months, as state revenue from taxes continues to slide and income from real estate deals slumps, according to preliminary figures released by the country’s Finance Ministry.

March figures showed that for the first time in nine months, Israel swung to a deficit of 0.01%, prompting economists’ warnings that the country will find it challenging to meet its fiscal deficit target for this year.

Among the difficulties expected are a continued decline in tax revenue, the forecast negative effect of the planned judicial overhaul on local economic activity, and a global economic slowdown.

In April, state revenues rose moderately to NIS 40.6 billion versus NIS 40.4 billion during the same month last year. However, since the start of the year, government revenue generated an accumulative NIS 161.2 billion, marking a 3.2% decline compared to the corresponding period in 2022, while state expenditure increased 6.9% during the same period.

Income from taxes dropped by an accumulative 4.3% in the first four months of the year versus the same period last year as tax income from real estate deals fell 35% pointing to further signs that Israel’s booming housing market is cooling down amid a higher interest-rate environment.

Most notably in April, net income from real estate taxation slumped 49% to NIS 1 billion compared to NIS 1.9 billion April 2022. Income from the collection of property appreciation taxes decreased by 56% and income from purchase taxes dropped by 45%, compared to the corresponding period last year.