Published On: Fri, Feb 14th, 2014

Israel Economy : Budget Data for January 2014

Pinchas-LandauBottom line: The Treasury hit a home run in January, getting its budget performance in 2014 off to a very strong start. The key features were strong revenues, even after accounting for one-off items and the impact of tax rises enacted last year, as well as continued restraint in spending. Obviously, the question is whether these trends will be maintained during the year. This seems unlikely, but January suggests that is by no means impossible.


  • The fact there was a budget surplus in January is not surprising – there usually is in that month. What WAS surprising was it size – NIS4.4bn – and the contributing factors.
  • Revenues were up in almost every area, including VAT, which had been sluggish in previous months. Net VAT receipts rose by 17.5% over January 2013, and even VAT on imports posted 3% rise, despite the shekel’s continuing strength.
  • Income tax receipts were boosted by the tax take on Google’s purchase of Waze. However, after discounting for this and for the higher tax rates in force in January compared to 2013, revenues were still up 6.6%. .
  • A potentially significant negative feature in an otherwise strongly positive month was the 4.5% decline in income tax deductions at source – mainly from salaries. This stands in contrast to the massive (57%) increase in corporate income tax and healthy 11% rise in collection from self-employed (all comparisons with January 2013).
  • On the spending side, defence spending once again stood out, swallowing 8.1% of its annual budget in January, compared to 6.1% of overall ministry outlays.
  • Revenues from capital gains tax more than doubled, reflecting the strong equity market through January.


FC reserves Jan 2014

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About the Author

- About Pinchas Landau is an economic and financial analyst, serving as a consultant to major financial institutions in Israel and abroad on domestic and global developments. After working in banking and investment, he moved to journalism in 1983 and served as financial correspondent of the Jerusalem Post and then as senior columnist for Globes, Israel’s business daily. He has written for many international newspapers, including the Wall Street Journal and Barrons, as well as numerous professional publications. Since 1996, Pinchas has been writing and publishing The Landau Report, a unique newsletter service which analyses economic, business and financial trends in Israel, as well as tracking Israeli and regional geo-political affairs and has attracted a global subscriber base. He has also been providing quarterly and annual reports on Israel for the Economist Intelligence Unit for 25 years. Landau is also an accomplished speaker, lecturing in English and Hebrew to audiences in Israel and overseas on a range of issues relating to Israel and the Jewish world. Born in London and educated at the London School of Economics, he and his family have been living in Jerusalem since 1976.

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