The Ministry of Finance has published a draft law on a tax on excess income of banks

According to the bill, in 2026-2030 banks will have to pay an additional 15% tax on part of the profit that exceeds the average profitability for 2018-2022 by 50%.

The leadership of the Ministry of Finance argues this step by the excess profits received by banks due to the Bank of Israel increasing the discount rate in conditions of low competition.

According to the forecast, in 2026 the tax will bring 1.13 billion shekels to the state treasury, and in 2027-2030 – about 1.5 billion shekels annually.

It should be noted that the interdepartmental commission that prepared the bill recommended establishing an additional tax at the level of 7-10%.

It should also be noted that the Treasury Department’s budget department expressed disagreement with this move, warning of the risk of “credit strangulation” – a high tax on marginal profits creates a negative incentive for issuing new loans, which will hit small businesses and economic growth.