Knesset revokes Smotrich’s order expanding personal import tax exemption to $130

Finance minister rails at MKs for ‘hurting the pockets of Israeli citizens,’ as members of ruling Likud party help defeat measure they say harms local industry; tax-free limit reverts to $75

By Ariela Karmel

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2 June 2026, 6:48 am

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Ariela Karmel is a political correspondent at The Times of Israel. She previously reported for Calcalist and Haaretz. She holds an MA in Middle Eastern and African History from Tel Aviv University and a BA in Political Science from the University of British Columbia.

Finance Minister Bezalel Smotrich attends a Finance Committee meeting at the Knesset in Jerusalem on May 26, 2026. (Yonatan Sindel/Flash90)

Knesset lawmakers on Tuesday voted 59-23 to revoke Finance Minister Bezalel Smotrich’s order raising the value-added tax exemption threshold on personal imports from $75 to $130, effectively restoring the previous $75 limit.

“All those who voted this evening against raising the VAT exemption on products ordered from overseas are hurting the pockets of Israeli citizens,” Smotrich wrote on X in response.

The vote marked the latest setback for Smotrich’s efforts to lower the tax on personal imports and a rare instance of the Knesset overturning a ministerial order, while reflecting divisions in the coalition ahead of elections later this year.

In February, Smotrich signed an order in defiance of the Knesset to increase the exemption to $130, just hours after the body voted 59-25 to revoke his earlier order raising the threshold to $150.

The measure drew opposition from lawmakers across the political spectrum as well as small-business owners, who argued that it would undermine local retailers by encouraging purchases from overseas online platforms.

Knesset Finance Committee chair Hanoch Milwidsky, Economy Minister Nir Barkat and MK Eli Dalal, all members of the ruling Likud party, were among the initiative’s most vocal critics, accusing it of subsidizing foreign companies at the expense of local industry.

“The cost of this absurd order is more than NIS 1 billion ($354 million) to the Israeli economy,” said Milwidsky, adding that the order “encourages nothing but excessive and unnecessary consumption” and was designed to distract from “the finance minister’s failure to address anything related to the cost of living.”