Israel moves toward eliminating cash
Israel’s government is considering eliminating the 200-shekel bill as part of its overall plan to completely eliminate cash.
Prime Minister Benjamin Netanyahu on Thursday convened a subcommittee of the Knesset (Parliament) ostensibly focused on “advancing the fight against crime in the Arab sector.” Netanyahu instructed the subcommittee to work with the finance minister, the Bank of Israel’s governor, the Tax Authority, and the director general of the Prime Minister’s Office on a plan to fight “black money.”
Black money refers to funds that the government cannot track and whose users the government cannot identify. In other words: cash.
According to Israeli media, the plan recommends eliminating the 200-shekel bill from circulation and, eventually, outlawing cash altogether.
“The staff also recommended reducing, as much as possible, the use of cash, until it is completely canceled within the span of a few years,” reported Israel National News.
Existing limits on the use of cash
The Israeli government has been working for years on slowly eliminating cash under the pretext of money laundering and black money.
In August 2022, Israel decreed new restrictions on cash transactions with businesses that lowered the cap from 11,000 NIS ($2,906) to 6,000 NIS ($1,585). Between individuals, the limit on cash transactions was lowered from 50,000 NIS ($13,210) to 15,000 NIS ($3,963). The law also applies to cash equivalents.
Citizens who purchase an item or service that costs more than the cap and split the payments into several smaller transactions face a prison sentence of up to three years.
Offenders may also be fined 10%-30% of the transaction, depending on the amount and nature.
According to Globes, the law will mainly impact the working class, such as handymen, plumbers, and electricians, in addition to small landlords and furniture businesses.
The state is also working on legislation that will place limits on the amount of cash private citizens can keep at home. The cap would be placed at 200,000 NIS ($52,844), even in foreign currency. Suspicion of an offense would be grounds for a search warrant.
But even if a citizen holds less than $52,844, they would still be required to report it to the Israel Tax Authority and explain the source of the funds.
Citizens would be allowed to keep only up to 50,000 NIS ($14,545) in their homes without reporting it.
A goal to completely eliminate cash
While the State of Israel mentions money laundering and tax evasion as justifications for these laws, they are clearly not the only factors. The government also aims to control how citizens spend their money and ultimately phase out cash altogether, allowing only digital 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,” reported Globes.
