Israel is considering canceling the 200 shekel bill

Tel Aviv - Ofoq News - The Director of the Israeli Tax Authority, Shai Aharonovitch, sparked controversy by announcing today, Monday, during the annual conference of tax consultants in Eilat, that the abolition of the 200 shekel note has returned to the agenda, as part of efforts to combat black money and reduce tax evasion.

Aharonovitch warned of the possibility of imposing a large tax increase within a few months, noting that re-introducing the cancellation of the banknote comes as part of efforts to confront unauthorized funds.

The Director of the Tax Authority said that the authority will demand tightening restrictions on cash payments, up to the abolition of the 200 shekel note, and perhaps banning cash dealing in the future, despite the Bank of Israel’s opposition to this step.

Aharonovitch added: “I say here as clearly as possible that if the use of cash in Israel were abolished tomorrow, this could lead to the collection of additional taxes ranging from 20 to 30 billion shekels annually, and prevent other painful steps from being taken, but the Bank of Israel opposes this.”

Aharonovitch warned that the budgets for 2027 and 2028 will be tough, stressing that the Ministry of Finance has begun preparing proposals for tax increases to be presented to the next government, in light of expectations of limited economic growth and the continuation of the war on several fronts.

He pointed out that the rise in the defense budget to about 200 billion shekels annually over the next two years, in addition to the costs of mobilizing reserve forces, will make increasing taxes inevitable.

“Stricter enforcement of the retained earnings law is being considered, and it is better to take smart steps to finance costly security than to look for easy solutions, such as raising the VAT by a percentage, raising the income tax rate by a percentage, and doing the exact opposite by expanding income tax brackets,” Aharonovitch added. “We are trying to think outside the box and find solutions that do not burden the entire public.”

The Director of the Tax Authority confirmed that abolishing the property tax on land years ago was a mistake, and that “a group of stakeholders at that time abolished a good tax. If we do not think of good and innovative solutions, we will face an economic crisis, and we will then be forced to raise the value-added tax and income tax, and this will be a bad solution.”