Cabinet Unanimously Decides to Establish Team to Evaluate Reducing the Use
of Cash
(Communicated by the Prime Minister's Media Adviser)

The Cabinet, today (Tuesday, 17 September 2013), unanimously approved the
establishment of a team to evaluate reducing the use of cash. The team, to
be chaired by Prime Minister's Office Director General Harel Locker, has
been authorized to formulate an outline on a policy for reducing and
restricting the use of cash as a means of payment in the Israeli economy.
The team has been established at the direction of Prime Minister Benjamin
Netanyahu in order to step up the war on the "black capital." The team will
include the Director of the Israel Tax Authority, the Commissioner of the
Israel Police, the Chairman of the Israel Money Laundering and Terror
Financing Prohibition Authority and the Bank of Israel Director of
Accounting, Payments and Settlements Systems, the Deputy Attorney General
and senior Finance Ministry representatives. The main goals are to maximize
tax collection which will lead to an appropriate expansion of the tax base
and to fight economic crime and money laundering. The team will evaluate
what has been done in this area in other countries as well as the nature of
the Israeli economy and will formulate its recommendations on this basis.

The use of cash is recognized in Israel and the world as a significant
factor in creating an "underground economy." An underground economy
facilitates a gap between reported economic activity and genuine economic
activity and constitutes a means of tax evasion, money laundering and
exploitation by criminals in order to finance crime. In the world there is a
clear correlation between the amount of cash and the scope of capital
evasion.

Restricting the use of cash in the Israeli economy will realize many goals.
The intention is to submit to the Cabinet innovative solutions that will be
beneficial for the public and turn Israel into a pioneer in the field.
According to data presented to the Cabinet by the Bank of Israel, the public
is naturally moving toward using electronic means and there is a need to
oversee the process in order to verify that it is being carried out
properly. In the world this is known as a cashless society.

It is important to note in this context that the intention is to evaluate
and create incentives to encourage the transition to using electronic debit
cards that do not entail fees, i.e. cash will be translated into "cash
cards" such that citizens and small businesses do not incur additional costs
relative to using cash. (This is not the encouragement of carrying out
transactions with credit cards.) The substitute that will be offered will be
accessible to the public at large, including weaker strata, those without
bank accounts (by using the postal bank) and those who receive support
payments from the state.

PMO Dir.-Gen. Locker said, "In the Israeli economy, there are, according to
estimates, billions of shekels that are not taxed; therefore, the public
does not benefit from this money. The team will find innovative and logical
solutions for correcting the situation and will submit a plan for Cabinet
approval."