New laws introducing stricter restrictions on funds with massive sums will go into effect in Israel on Monday. The objective, recognized by the country’s tax administration, is to strengthen the fight against organized crime, money laundering and tax evasion. Critics doubt the legislation will achieve that.
Israeli authorities crack down on silver purchases and introduce discount limits
Funds made up of huge sums of cash and checks from financial institutions will be further restricted in Israel by amendments that are expected to come into force on August 1. Tax officials are to further reduce the circulation of money in the country, hoping to curb illegal actions such as laundering of illicit funds and non-compliance with tax obligations, The Jerusalem Post reported.
Under the new laws, companies may be required to use non-monetary strategies for any transaction above 6,000 shekels ($1,700), a notable drop from the previous cap of 11,000 shekels ($3,200). The money limit for individuals who are not usually registered as business owners can be NIS 15,000 (nearly $4,400).
Decreasing the use of cash is the main function of the law, according to Tamar Bracha, who is responsible for enforcing the principles on behalf of the Israel Tax Authority. Quoted by the media Media Line, the manager clarified:
The aim is to reduce the flow of money, mainly because criminal organizations are inclined to depend on money. By limiting its use, prison exercise is much more difficult to maintain.
However, a lawyer representing buyers in an opposition to the law filed in 2018, when it was first passed, insists the main downside is that the law is simply not environmentally friendly. Uri Goldman referred to information showing that since the preliminary introduction of the legislation, the amount of money has really increased. Highlighting another of its drawbacks, the additional authorized expert defined:
When the bill was handed over, there were over a million residents without bank accounts in Israel. The legislation would prevent them from conducting any business and turn almost 10% of the inhabitants into criminals.
An exemption to buy and sell with Palestinians from the West Bank and charities active in ultra-Orthodox communities has also sparked controversy. Offers with massive sums may be allowed in these cases, provided they are fully reported to the tax authorities. Goldman thinks it’s unfair to the rest of society.
The Ministry of Finance also wants to restrict personal cash holdings
In his unique draft, first proposed in 2015, the legislation additionally included a provision limiting the personal possession of huge sums of cash to 50,000 shekels ($14,500). Although it was abandoned at the time, Israel’s finance ministry now plans to reintroduce it and let parliament decide whether or not to undertake it after the next election.
Uri Goldman also believes that authorities should at least allow individuals to declare their money and deposit it in a checking account. This idea was directed throughout the preliminary discussions on the laws as well, but in no way accredited. In all other cases, the money will remain in circulation even if it is not used as before, he noted.
Meanwhile, the Bank of Israel has explored the possibility of placing a digital shekel, another type of national fiat believed to have cash options. The vast majority of respondents to public consultations conducted by the financial authority backed the plan, the results revealed in May showed.
Do you think the brand new legislation will limit the use of money in Israel? Share your expectations in the comments section below.
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