JERUSALEM, Aug 27 (Reuters) - Israel’s budget deficit will reach 3.5 percent of gross domestic product in 2015 if the government doesn’t raise taxes and maintains a plan to eliminate value added tax for some home buyers, the Bank of Israel said on Wednesday.
In preliminary discussions on the 2015 state budget, Finance Minister Yair Lapid met Bank of Israel Governor Karnit Flug and Prime Minister Benjamin Netanyahu.
Lapid has proposed to raise the deficit to above 3 percent of GDP from a current 2015 target of 2.5 percent and rejected Flug’s demand to raise taxes to cover a large budget hole.
The central bank in response said there was scope to increase the target to about 3 percent of GDP to cover one-time expenses related to Israel’s 50-day war with Hamas in Gaza and the impact from an apparent slowdown in tax revenue growth. (Reporting by Steven Scheer; Editing by Tova Cohen)