Coalition factions threaten to vote against key budget bill over cuts, Haredi draft

Ben Gvir, Israel Police slam Finance Ministry over budget cuts. Smotrich brands fellow minister a populist endangering the ability of the government to pay for the war

Sam Sokol is the Times of Israel's political correspondent. He was previously a reporter for the Jerusalem Post, Jewish Telegraphic Agency and Haaretz. He is the author of "Putin’s Hybrid War and the Jews"

(L) Housing Minister Yitzchak Goldknopf attends a press conference in Tel Aviv on February 4, 2024 (Avshalom Sassoni/ Flash90) and (R) National Security Minister Itamar Ben Gvir arrives for a court hearing at the District Court in Jerusalem, November 10, 2024 (Chaim Goldberg/ Flash90)
(L) Housing Minister Yitzchak Goldknopf attends a press conference in Tel Aviv on February 4, 2024 (Avshalom Sassoni/ Flash90) and (R) National Security Minister Itamar Ben Gvir arrives for a court hearing at the District Court in Jerusalem, November 10, 2024 (Chaim Goldberg/ Flash90)

The far-right Otzma Yehudit and ultra-Orthodox Agudat Yisrael parties threatened Monday to oppose a key budget bill, demanding that the coalition meet their demands before they begin voting with it again.

In a statement, Otzma Yehudit called on Finance Minister Bezalel Smotrich to halt cuts to party chairman Itamar Ben Gvir’s National Security Ministry, claiming that such a move would directly affect the salaries of police and prison guards and warning that “until Smotrich stops harming the police, the Prison Service, and the Fire and Rescue Authority, we will vote against the Trapped Profits Law.”

The reduction in funding to the ministry is not specific, but is part of cuts being made across the board. Ben Gvir has a history of threatening his coalition partners to advance his political and policy goals.

The Trapped Profits Law, which was approved for its second and third readings in the Knesset Finance Committee on Sunday, would allow the government to tax so-called “trapped profits,” which are gains earned by corporations and multinationals that are not distributed as dividends to shareholders, but invested in business development, infrastructure, and research and development centers.

Until now, trapped profits were tax-exempt to encourage investments. If the new tax is approved by the end of 2024, it is expected to generate NIS 10 billion in revenues in 2025.

Ben Gvir’s threat came after his party has already twice voted against bills related to the 2025 state budget, over ongoing disputes regarding budget cuts and his demand for the immediate termination of Attorney General Gali Baharav-Miara.

Finance Minister Bezalel Smotrich leads a Religious Zionism faction meeting at the Knesset in Jerusalem, on December 9, 2024. (Yonatan Sindel/Flash90)

It also came on the heels of a report in the ultra-Orthodox Hamodia daily that members of the Hasidic Agudat Yisrael — a faction of the United Torah Judaism party — believe that “there is no point” in supporting the Trapped Profits Law before the issue of IDF exemptions for yeshiva students is settled, and will therefore vote against it.

The opposition of both Otzma Yehudit and Agudat Yisrael would be enough to prevent the bill’s passage. It is due to be voted on Tuesday in the Knesset plenum.

Responding to Ben Gvir’s threats, Finance Minister Smotrich accused his former electoral ally of “populism,” telling the Kan public broadcaster that police salaries had already been increased and that Ben Gvir was setting himself up as “Santa Claus” granting gifts, while vilifying the Finance Ministry.

If Ben Gvir follows through on his threat and blocks the Trapped Profits Law, “it would certainly not be possible to pay salaries to the police, and it would certainly not be possible to finance the costs of the war,” Smotrich continued, adding that the war is costing the government more than a quarter of a trillion shekels ($68 billion) “and we all have to finance it.”

Later in the evening, the Israel Police joined the fray, issuing a statement attacking the Finance Ministry for allegedly harming law enforcement in general and the Yamam police counter-terrorism unit in particular.

“In a unilateral decision by the Finance Ministry, it was decided to freeze a budget that is intended to build a building for the Yamam, whose fighters are working tirelessly for the security of the State of Israel and its citizens,” the statement alleged, calling the decision unjustified.

Fighters in the Border Police’s Yamam counterterrorism unit, December 2018. (Border Police)

Responding on Twitter, Ben Gvir, whose ministry oversees law enforcement, called on Smotrich to “keep your hands off the police.”

The Finance Ministry declared that it had transferred funding for the project “a long time ago,” but that the police chose not to advance it, ostensibly because the commissioner had decided to prioritize other issues.

“The attempt to present a false and contrary representation, while cynically exploiting the… [officers], is regrettable and unnecessary,” the ministry stated.

A new enlistment bill

Prime Minister Benjamin Netanyahu was reported to have made an effort to get the coalition behind the Trapped Profits Law, even while he recovers from a prostate operation he underwent on Sunday.

According to Hebrew media, Netanyahu called United Torah Judaism chairman and Housing Minister Yitzhak Goldknopf from his hospital room to promise him that the Knesset would advance a conscription law.

According to Kan, Goldknopf replied that Netanyahu had made a similar promise in the past and declined to back down from a threat to vote against the budget-related bill in the Knesset on Tuesday, unless presented with a draft of a conscription bill that satisfies his party’s demands.

Goldknopf said that his party would vote against the Trapped Profits bill on Tuesday as a “warning sign,” Walla reported, citing an Agudat Israel official as saying that the party was “not looking to bring down the government” and just wanted Netanyahu “to finally fulfill his commitment.”

Ultra-Orthodox Israelis protest against mandatory military service, outside IDF Recruitment Center in Jerusalem, October 31, 2024. (Chaim Goldberg/Flash90)

Passing a law to enshrine ultra-Orthodox exemptions from military service struck down by the High Court of Justice this summer has become one of Goldknopf’s chief legislative priorities.

Legislation dealing with the issue of enlistment is currently stuck in the Knesset Foreign Affairs and Defense Committee, whose chairman, Likud MK Yuli Edelstein, has said that the needs of the IDF must come first and that the panel will only advance the legislation if lawmakers can reach a “broad consensus” on the matter.

Addressing the committee in a closed session earlier this month, newly appointed Defense Minister Israel Katz called for annual recruitment targets within what he termed a reasonable range, playing up the idea that half of eligible draftees could end up serving, while the rest continue studying in yeshivas.

In a landmark ruling in June, the High Court of Justice ruled unanimously that the government must draft ultra-Orthodox yeshiva students into the military since there was no longer any legal framework to continue the decades-long practice of granting them blanket exemptions from army service.

The ultra-Orthodox parties are demanding contentious legislation that broadly maintains the widescale exemption from IDF or other national service of ultra-Orthodox males. Netanyahu, whose governing majority depends on the support of the UTJ and the second ultra-Orthodox party, Shas, has been seeking to meet their demand, in the face of bitter political and public opposition, especially given the unprecedented burden on the IDF, notably including reservists, more than 14 months into a multi-front war.

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