The state has not worked effectively in order to reach the billions of shekels invested in the cryptocurrency market and could have earned NIS 3 billion in taxes for the Finance Ministry coffers.
In his report, State Comptroller Matanyahu Englman blamed the Tax Authority for not taking the necessary steps to improve its ability to collect taxes when Israel’s debt burden is increasing due to the war and security needs.
The State Comptroller stressed the need to examine how to collect taxes from the cryptocurrency market before the government raises taxes for the public.
The State Comptroller examined the issue for 2018-2022 and found that during the period, only 500 reports were registered on average per year to the Tax Authority about activities in the cryptocurrency market, out of a potential of about 200,000 cryptocurrency wallet owners — so that only 0.25% of transactions are reported to the Tax Authority.
This is the lowest of various estimates, while the State Comptroller’s maximum estimate raises the number of cryptocurrency wallet owners to about 1.7 million.
Matanyahu Englman, State Comptroller of Israel and President of The European Organization of Supreme Audit Institutions, giving a speech at the 160 year anniversary of the Romanian Court of Account, September 20, 2024. (credit: COURTESY OF THE STATE COMPTROLLER’S OFFICE)
The report shows that since 2018, the Tax Authority has issued only three publications on the topic of taxation in the cryptocurrency market, and has not bothered to update the rules it published. Thus, the necessary adjustments have not taken place, despite significant developments in the market.
Increase in pricing
According to a report by Englman released on Tuesday, food prices rose between 2.9% and 6% in the first three months of the Israel-Hamas War.
The report also included that the country’s import-to-gross domestic product ratio is just 23.4% compared to 47%, which is the average in OECD countries; around 25% of Israel’s big stores have a high level of geographic concentration, and the Competition Authority has not done enough to examine its part in breaking up concentration in these markets.
The fact that the ministerial committee established to fight the high cost of living has only met seven times since it was founded in June 2023 in spite of prices increasing and the impacts of war on prices was also highlighted in the report.
Englman called on the political leadership to follow up on reforms and to verify that they are updated and appropriate to contend with the cost of living and increased food prices.
