From the Liveblog of
Monday, October 14, 2024
Treasury advances budget-related law presenting massive cuts to fund 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"
The Finance Ministry presents this year’s Arrangements Law for public comment, ahead of the upcoming Knesset legislative session. The law, which determines how funds will be disbursed, is usually the final precursor to passing the budget.
The period for public comment on the massive bill, which runs over 240 pages, will run through Sunday.
Earlier this month, Finance Minister Bezalel Smotrich presented an initial state budget framework for 2025 based on a deficit target of up to 4% of gross domestic product.
To offset the increased military and civil costs of the war, the government will need to implement tough spending cuts and introduce tax changes to increase state income and deal with a fiscal hole in 2025 of an estimated NIS 30-40 billion ($8-11 billion).
The draft Arrangements Law released today stipulates a number of measures to deal with this challenge, including freezing minimum wage hikes and salary raises for senior public sector workers and updates to benefits paid out by the National Insurance Institute for terror victims and Holocaust survivors.
It also includes the freezing and lifting of benefits for pension savings and advanced study funds, as it seeks to bring down the large budget deficit and finance the ongoing war with the Hamas terror group in Gaza and Hezbollah in Lebanon.
In addition, the bill calls for negotiations with the Bank of Israel regarding a tax on bank profits, additional taxes on capital gains and real estate and the cancelation of tax exemptions for duty-free cigarettes. Some diplomatic missions abroad would be closed under the legislation and the Port of Ashdod privatized.
Moreover, if passed, the Arrangements Law would increase mandatory health insurance and National Insurance Institute payments, establishing minimums of NIS 127 ($33) and NIS 223 ($59), respectively.
Responding to the bill, Yisrael Beytenu MK Oded Forer tweets that Prime Minister Benjamin Netanyahu and Smotrich “prefer to put their hands in your pocket and take the last of your available shekels” rather than confront the ultra-Orthodox parties over nixing funds to coalition party priorities.
“Bibi prefers a fat government and a hungry public,” he declares.
The Times of Israel Community.