JERUSALEM, May 26 (Reuters) - Cash transactions between businesses will be limited to 5,000 shekels ($1,400) under an Israeli government plan to fight money laundering and tax evasion.
Harel Locker, director-general of the prime minister’s office, said Israel was likely to collect 40 billion-50 billion shekels from the move - nearly 20 percent of the country’s annual budget.
“This is a lot of money and we want this money,” Locker told reporters. “We want to be a leading country in the battle against tax evasion and money laundering.”
Israel is about to start debating the 2015 state budget, and it is seeking ways to raise revenue and spend more on health, education and infrastructure.
Locker headed a government panel that issued its interim recommendations on turning Israel into a cashless society on Monday. These include limiting businesses initially to cash or cash-equivalent transactions of 7,500 shekels - down from 20,000 shekels currently - and no more than 5,000 shekels after a year.
Private citizens will be allowed cash deals of 15,000 shekels. The new rules would also limit the use of checks.
Many European countries have similar restrictions.
In 2012, there were 3 million unidentified cash transactions of more than 5,000 shekels for a value of 273 billion shekels, according to the prime minister’s office. Locker said some of the money being laundered is used by organised crime and backers of terrorism.
“Cash and cash equivalents are the fuel of the black economy,” said Locker, whose committee was appointed by prime Minister Benjamin Netanyahu.
As part of the move to reduce the use of cash, the panel recommended that banks issue debit cards. Banks now only issue credit cards, and Locker said costs would come down with debit cards since there is no credit involved.
He expressed confidence that most citizens will comply with the new rules, since violating them would be a crime and most transactions by ordinary people are for less than 5,000 shekels.
After another round of hearings, Locker’s committee will issue final recommendations, which could take a couple of months. It will then require parliamentary approval. Locker expects the law to be approved by the end of 2014.
$1 = 3.4822 Israeli Shekels Reporting by Steven Scheer; Editing by Larry King