What happened
Senior officials at Israel's Finance Ministry are drafting proposals for the 2027-2028 state budget despite the absence of a formed government. The work is being led by the Committee of Three, consisting of Budgets Commissioner Maharan Froznfar, Chief Economist Dr. Shmuel Abramson, and Tax Authority Director Shay Aharonovich.
The ministry is examining several revenue-raising measures to cover massive defense expenditures and a heavy deficit. One proposal would cancel the tax exemption on rental income from apartments up to a ceiling of about NIS 5,600 per month, potentially bringing in roughly NIS 1 billion annually. Another would reduce tax credit points for working parents, which currently cost the state about NIS 14.5 billion per year.
Other ideas under consideration include reinstating a tax on vacant land, reducing tax benefits on continuing education funds, and transitioning businesses to immediate VAT payment through an expanded online invoicing system.
Officials cautioned that none of the proposals have been approved and that their fate depends on the composition of the next government and the identity of the next finance minister. Some measures face expected political opposition, while others are viewed as unlikely to pass.
