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Bank of Israel: Israelis Pay Less Tax, Get Less

Bank of Israel finds Israelis pay less tax than others in OECD - and get less from the government.
By Maayana Miskin
First Publish: 12/8/2013, 3:19 PM

Bank of Israel head Karnit Flug
Bank of Israel head Karnit Flug
Israel news photo: Flash 90

The Bank of Israel has released a survey comparing Israel to other OECD nations. The bank found that Israelis have a relatively low tax burden, and that Israel spends relatively little on public services.

In the average OECD country, government expenditures account for 45.9% of the GDP, while in Israel, government spending is 40.2% of the GDP.

Israel is in 26th place out of 32 countries regarding government spending as a percent of national spending.

If the comparison is based solely on government social spending – for instance, expenditures related to education, health and welfare – Israel is in second to last place.

Israel’s tax to GDP ratio was above the OECD average until 2007, but is now below average.

The Bank of Israel report also included a look at Israel’s economic forecast for the upcoming years. The bank warned against deviating from the scheduled reduction of the national dept.

The national debt is expected to go down even beyond what was initially expected in 2013, and to remain stable in 2014, the bank said, but is expected to deviate from the target debt level in 2015-2017.

The report proposed that during those years, Israel either reduce public spending per person or increase the tax rate in order to avoid excess debt.