Health, Finance ministries support health tax hike

The Health and Finance Ministries, as well as the Knesset Health Committee, support a significant increase in the health tax that Israelis pay every month.

Health insurance tax is levied at 3.1% on the first NIS 7,522 and at 5% on the difference between that figure and the ceiling calculated for monthly income at NIS 49,030. If approved, the increase to 3.25% and 5.15% respectively will go into effect at the beginning of 2025, but committee approval will make it possible to allocate a dedicated budget for the mental health system next year. The increase will mean NIS 1 billion more for psychiatric care.

Committee chairman Shas MK Yoni Mashriki said that the increase must not come at the expense of the state’s participation in the Basket of Health Services. “We will make sure that this budgetary addition from the tax increase will indeed reach the needs of mental health.” He demanded that the two ministries submit an orderly plan on how the NIS 1 billion that is to be added will indeed be dedicated to the mental health system.

According to Prof. Gabi Bin Nun, a senior health economist in the health systems management department at Ben-Gurion University of the Negev in Beersheba, because health fund premiums constitute a dedicated tax for healthcare, the expectation is that when this tax rises, the public will receive more through expanding the basket of services.

However, he added that according to the wording of the proposed legislation, the increased income from the increase in health insurance premiums is offset by a reduction in the participation of the state budget, so that the total sources of the law as well as the rights of the residents do not change. In addition, due to the salary ceiling required for health insurance, the tax increase is regressive and harms the poor.

He wondered why another, more progressive tax source, such as the income tax, was not selected as a source of financing the huge costs of the Gaza war.

Health Ministry Director-General Moshe Bar Siman Tov told the committee that with the difficult reality after the brutal Hamas massacre on October 7, the war, and the need to prepare for the battles in the North, a dedicated budget was needed for the emotional health of the victims and their families, the evacuees and their families, and rescue forces.