Tax Authority Chief Suggests Eliminating Cash and 200 NIS Notes to Fight Black Economy
Tax Authority Director Shay Aharonovich warned that upcoming state budgets will require severe measures, suggesting the elimination of cash and the 200 NIS banknote to combat the black economy and generate tens of billions in revenues.
The 2027-2028 state budget will be severe and require sweeping measures, including the potential elimination of cash usage and the 200 NIS banknote, according to Tax Authority Director Shay Aharonovich. Speaking at the Tax Advisers Chamber conference alongside Chamber President Yaron Elharar, Aharonovich addressed the recent corruption scandal in the Kfar Saba municipality, where Mayor Rafi Saar and other officials were arrested on suspicion of accepting bribes primarily paid in cash.
Aharonovich estimated that completely abolishing cash in the country could generate an additional 20 billion to 30 billion NIS annually in tax revenues. While the Bank of Israel has previously opposed eliminating the 200 NIS banknote, Aharonovich argued that recent events highlight the urgency of tackling the black economy.
During the discussion, Aharonovich also addressed potential changes to corporate taxation regarding trapped profits. He suggested that companies might be required to distribute 8% of their profits as dividends instead of the current 6% to avoid penalties. Chamber President Yaron Elharar strongly objected, noting that this is a major concern for the business sector. Aharonovich clarified that completely canceling the trapped profits tax is unlikely due to the state's budget needs, but the mechanism could be adjusted following a comprehensive review planned for 2027.
