Knesset passes budget first reading as Ben-Gvir votes against

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The NIS 619 billion 2025 budget is NIS 105 billion higher than the 2024 budget.

The Knesset last night passed the first reading of the 2025 budget by a narrow majority of 59-57, even though Minister of National Security Itamar Ben-Gvir voted against the bill. The budget will now be discussed by the Knesset Finance Committee before being re-presented to the Knesset plenum for its second and third readings.

Ben-Gvir and the other five members of the Otzma Yehudit party joined the opposition in voting against the budget. Ben-Gvir said, "While the Attorney General is not being fired and the government is not doing the minimum on the matter, I will oppose the budget."

Minister of Finance Bezalel Smotrich said, "Ben-Gvir and his friends seem to have completely lost direction. They voted against a budget that is critical for victory, for reconstruction and for army reservists. Ben-Gvir is acting irresponsibly and endangering the right wing government in the midst of a war."

A NIS 105 billion increase on the 2024 budget

The proposed budget presented to the Knesset totals NIS 619 billion including an extra NIS 10 billion set aside for if the war continues. This is a sharp increase of NIS 105 billion over the 2024 budget, which was approved in 2023 before the war began and has since been added to three times. The fiscal deficit target for the end of 2025 is 4.4%.

Because of the delays to date, the expectation is that the budget will not be enacted by the Knesset before the second half of February. Until the budget is passed in 2025, government spending each month will not be allowed to exceed one twelfth of overall 2024 spending.

In an unusual initiative, most of the new 2025 tax measures imposed by the government have been pushed through the Knesset separately so that they can come into effect on January 1. These measures designed to increase state revenues include raising National Insurance payments, deducting one day of recreational payments from salaried employees, freezing and not revising income tax brackets and rights in line with inflation, freezing public sector pay, raising taxes on the wealthiest, and a new tax on trapped profits at companies.

Published by Globes, Israel business news - en.globes.co.il - on December 17, 2024

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