Treasury said to urge Smotrich to curb ballooning deficit spending amid war

Religious Zionism party leader Finance Minister Bezalel Smotrich leads a faction meeting in northern Israel, May 19, 2024. (Ayal Margolin/Flash90)
Religious Zionism party leader Finance Minister Bezalel Smotrich leads a faction meeting in northern Israel, May 19, 2024. (Ayal Margolin/Flash90)

During marathon discussions this week on the 2025 budget, treasury officials recommended to Finance Minister Bezalel Smotrich that cuts and taxes be imposed next year to raise an extra NIS 30-50 billion to fund war costs, according to Channel 12 news.

The television report says the officials told Smotrich that Israel needs to send a message to credit ratings agencies that it is serious about proper financial oversight, and cannot continue increasing deficit spending.

Among the specific moves they’re reportedly proposed are raising the current VAT tax of 17 percent by two points to 19%; cutting child allowances; freezing public sector wages; halting inflation adjustments to income tax rates in order to bring in more revenue; curbing tax breaks on workers’ saving funds that are primarily funded by employers; and slicing coalition spending.

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