Defying Knesset, Smotrich ups tax exemption for online purchases from abroad to $130

In defiance of the Knesset, Finance Minister Bezalel Smotrich signed an order Tuesday expanding the value-added tax exemption on personal imports from $75 to $130, hours after lawmakers voted 59-25 to revoke his previous order, which raised the exemption from $75 to $150. The new order took effect at midnight Tuesday night.

It is highly unusual for the Knesset to overrule ministerial orders. The vote was a notable defeat for Smotrich and reflected divisions in the coalition during an election year.

Smotrich’s new order allows residents to purchase up to $130 of personal goods from overseas without incurring an additional 18 percent VAT charge.

In a statement on X, the far-right minister said that he “will not let a handful of communists in Likud, or the irresponsible opposition that is fighting against Israeli citizens, win.”

He said he would continue fighting against the high cost of living. “The previous order already proved itself even before its expiration tonight in the Knesset,” he wrote. “Israeli citizens stopped being captives of the monopolies, and competition has already begun to lower prices. It can be affordable here.”

Shahar Turgeman, head of the Association of Retail Chains, rapped Smotrich for “humiliating the Knesset members by choosing to openly ignore their decision to cancel the order.”

He said in a statement that business owners would “be on guard and prevent implementation of this process until justice wins out,” and that the association would file a High Court petition against the order on Wednesday.

In a Tuesday interview with Channel 12 after his first order was defeated in the Knesset, Smotrich said he would sign another one and rejected the idea that he was disregarding the Knesset vote.

“There are rules to the game of democracy,” he said. “The law allows the finance minister to sign another order, different from the previous one, and that is what I will do.”

He insisted that he had the proper legal backing from his ministry’s legal advice and the Justice Ministry.

Smotrich apparently pegged his Tuesday order to a maximum VAT-exempt purchase of $130 in order to stymie possible invalidation by Attorney General Gali Baharav-Miara, who could argue that an order setting the limit at $150 had already been voted down by the Knesset.

Should the Knesset Finance Committee recommend canceling the new order, as it is expected to to, the matter will again go to the Knesset for a vote that must be held within two months.

The previous order, which went into effect on December 24, was hailed by the general public but drew sharp condemnation from local business owners who argued it would hobble their sales. They succeeded in garnering support from other members of the coalition, in particular from within Prime Minister Benjamin Netanyahu’s ruling Likud party, to revoke it following a lengthy overnight debate on Monday evening.

After the vote, Smotrich lashed out at members of Netanyahu’s right-wing coalition for opposing his measure, branding them as part of the “left” and accusing them of linking up with the opposition and working against the government.

“What happened tonight in the Knesset plenum was the joining of two forces: the communist faction, the economic left in Likud” and coalition MKs who “just want to hurt Prime Minister Netanyahu,” he said.

Netanyahu had reportedly sought to invoke coalition discipline to ensure the measure was upheld, but later backtracked and allowed lawmakers to vote as they chose.