Finance Ministry Reportedly Prepares Tax and Spending Plan for Next Government

The Finance Ministry, based in Jerusalem, has reportedly prepared a package of tax changes and spending reductions for Israel’s next government. The measures are intended to finance defense needs while restraining the deficit and debt relative to gross domestic product. Some proposals were developed with the Bank of Israel, according to the report published on October 27. The reported options include requiring landlords to declare residential rental receipts and taxing that income from the first shekel. The report puts the current monthly exemption at NIS 5,654. It also describes a levy on international content providers, often called the Netflix tax, reduced tax benefits for pension contributions, and removal of VAT exemptions from currently exempt sectors. On spending, the package identifies ministry efficiencies and sharp cuts to coalition funds as possible funding sources. The report describes a defense budget expected to reach NIS 187 billion. That figure is an expectation, rather than an approved allocation. The next government would face preparing the 2027 budget, potentially as part of a combined 2027–2028 budget, with reforms advanced through the Economic Arrangements Law. The reported measures remain proposals for the incoming government, rather than enacted tax changes.