Israel approves cash restrictions for ‘war effort’

Israel’s Finance Ministry Monday said that a slew of measures intended to offset “high war expenses” has been approved, including a reduction in travel and cash, Israeli media reported.

The statement came after the government approved a NIS 582 billion ($154 billion) budget for 2024 following a 26-hour closed-door meeting. The budget, which includes an extra NIS 70 billion ($18.5 billion) to continue financing Israel’s war in Gaza, must now be approved by the Knesset.

To reportedly compensate for these expenses and pad the state’s war chest, the government approved several restrictions.

“The government approved several measures to increase the state’s revenues: imposing a reduction in the use of cash, taxing bank profits, reducing travel, as well as reducing recreational bonuses for employees under an agreement with the Histadrut [trade union],” said the Finance Ministry, according to Ynet News. 

Details of the approved measures have not yet been revealed to the public. The Finance Ministry did not respond to GEN’s request for comment.

Israel’s government for the past few years has been placing greater restrictions on cash usage with the intent to establish a cashless society.

In 2022 the Israeli government lowered the cap on cash transactions from NIS 11,000 ($2,910) to NIS 6,000 ($1,600). The cash transaction limit between individuals was reduced from NIS 50,000 ($13,230) to NIS 15,000 ($4,000). Cash equivalents are likewise covered by the legislation.

When an Israeli taxpayer now buys a good or service for more than the equivalent of $1,600, they can pay in cash up to $1,600 or 10% of the total cost, whichever is less. The company must record the payment and specify the amount paid in cash. Similarly, cash payments for transactions between individuals are permitted up to around $4,000 or 10% of the total amount, whichever is less. 

If a taxpayer tries to exceed the cap by paying several smaller payments, they risk spending three years in jail.

The regulation will mostly affect small landlords and furniture companies, as well as blue-collar-workers like handymen, plumbers, and electricians, according to Globes.

Israel’s Finance Ministry is also pushing legislation limiting the amount of cash private citizens can keep at home. According to the proposed law, a taxpayer will be permitted to keep no more than NIS 200,000 ($52,900), even in foreign currencies. 

And even if a taxpayer has less than $52,900, they still need to disclose it to the Israel Tax Authority and provide an explanation for the money’s source. 

Taxpayers will be permitted to possess up to NIS 50,000 ($13,225) without having to report it. 

While the State of Israel cites tax evasion and money laundering as reasons for these regulations, the government has been open about its intention to regulate how people spend their money. This requires eventually banning cash entirely and only accepting electronic payments. 

“The Law for the Reduction in the Use of Cash was designed to change the public’s consumption habits and encourage a switch to digital means of payment, with a view to almost complete replacement of the use of cash in the future,” reports Globes. 

But cash and travel restrictions would not be the only restrictions proposed by Israeli leaders “for the war effort.” Since the October 7^th massacre, Israeli ministers have proposed arresting taxpayers who criticize the government, freezing the Freedom of Information Law, allowing law enforcement to seize private security cameras, and granting authorities unprecedented access to taxpayers’ private biometric data.