Israel eyes cashless economy to boost tax collection

JERUSALEM — Will that be cash or credit? Depends who's asking, but Israelis may soon not have much of a choice.

On Tuesday, the Israeli Cabinet approved establishing a committee to propose ways of reducing cash transactions and increasing electronic payment methods to combat the underground economy and tax evasion.

Using cash can help create an off-the-books economy, allowing a gap between reported economic activity and genuine economic activity, as well as encouraging tax evasion and other financial crimes, the cabinet statement said.

The public loses because billions of shekels, Israel's currency, go untaxed and don't contribute to the treasury, according to Harel Locker, the director general of the prime minister's office and the head of the new committee. It is expected to submit recommendations in 90 days.

One option is offering incentives to encourage a transition to the use of electronic debit cards, not particularly widely used in Israel. These wouldn't incur additional costs and are more accessible to a wide range of citizens than are credit cards.

The government aims to increase various other methods of electronic payments, including mobile phones and other mobile devices. According to media reports, it is mulling a ban on the use of cash altogether in taxis, kiosks and even market stalls.