Smotrich to halt voting with coalition until MKs pass bill giving reservists tax breaks

Legislative boycott will have little impact, as coalition does not currently have a majority; coalition whip Katz says bill ‘drastically discriminates against many reservists’

By Sam Sokol 5 November 2025, 10:09 pm

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Sam Sokol is a former political correspondent at The Times of Israel. 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"

Finance Minister Bezalel Smotrich announced on Wednesday that his Religious Zionism party will stop voting with the coalition until the Knesset passes legislation providing tax credits for IDF reservists.

In a statement, the far-right lawmaker stated that “in light of Likud’s refusal to advance the bill… to provide tax benefits to reservists, the Religious Zionism faction will not vote with the coalition until the Tax Benefits for Reservists Law is approved in second and third reading.”

“Reservists come first. The State of Israel owes them everything, and this outweighs any political consideration. No MK is allowed to harm reservists,” he said.

Smotrich’s stance comes a day after he clashed with the military over the 2026 budget, alleging that they were misusing the vast funds allocated to them at a time of war and singling out what he called the wasteful call-up of reserves for non-essential duties.

Under Smotrich, the government has allocated NIS 20 billion for reservists ($6 billion), including an income tax credit worth up to NIS 1,000 ($306) per month and subsidies for reservist students and other related benefits and “decision to stall the proposal in the Knesset for non-substantive reasons is unacceptable, and we will not allow it to happen,” Religious Zionism argued.

Former communications minister Yoaz Hendel’s Reservists party, which is not a member of the current Knesset, backed up Smotrich’s move, calling on all members of Prime Minister Benjamin Netanyahu’s coalition to join Religious Zionism in boycotting votes until the Knesset passes the bill.

The government approved the tax benefits in August, and the legislation passed the first of three readings needed to become law, but has since been held up in the Knesset Finance Committee.

IDF reservists receive tactical equipment as tens of thousands are called up ahead of a planned Gaza City conquest, in a photo cleared for publication on September 3, 2025. (Israel Defense Forces)

If passed, the bill would grant income tax credit points to combat reservists on a graduated scale based on the number of days served. Reservists would receive more benefits depending on the time served and how many children they have.

However, Finance Committee chairman Hanoch Milwidsky has complained that there are significant economic disparities in the bill, which he asserted discriminated against lower earners.

“I’m very sorry, but I can’t shake the feeling that in the finance minister’s office they’re more concerned with how they look in the media — with making it seem as though they support the reservists and are doing something — while in practice, when it comes time to actually do the work, they’re not really doing it,” he told the committee last month.

Milwidsky is basically arguing that “tax credit points — which are a regressive tool — actually create discrimination between high-income earners and people who pay little or no tax at all” and as things stand now “the more you earn, the greater your benefit,” committee member Vladimir Beliak (Yesh Atid) told The Times of Israel.

“There’s room to improve the law,” he added.

Yesh Atid party opposition MK Vladimir Beliak at a Constitution Committee meeting at the Knesset, in Jerusalem, on March 5, 2023. (Erik Marmor/Flash90)

Reservists have repeatedly complained about the personal and financial burden of their extended service since October 7, describing failing marriages, destroyed businesses and other hardships.

Religious Zionism’s decision not to vote with the coalition will have little impact, as the coalition does not currently have a majority as it is and is contending with an ultra-Orthodox legislative boycott.

In addition, National Security Minister Itamar Ben Gvir last month threatened to cease voting with the coalition unless a death penalty bill for terrorists passes by next week. (The bill is currently being advanced with the prime minister’s support.)

Responding to Smotrich, coalition whip Ofir Katz said that “the bill in its current form drastically discriminates against many reservists, especially students and those with low incomes, who will not be able to take advantage of the benefit.”

“The purpose of the bill is commendable, but changes are needed, and there is agreement on this among all members of the Finance Committee. It is a shame that someone who has been opposing ultimatums and boycotts for three years is acting in this way instead of resolving the matter substantively, and is refusing any compromise offered to him.”

Coalition Whip Ofir Katz attends a plenum session at the Knesset, in Jerusalem on May 7, 2025. (Yonatan Sindel/Flash90)

“We seek to benefit all reserve soldiers, not just those with high incomes. I support Finance Committee chairman Milwidsky and the committee members in their just struggle,” Katz said in a statement.

Hitting back, sources close to Smotrich declared that “Ofir Katz and the Likud party will not lecture the finance minister about benefits for reservists. He is the one who promoted three government decisions totaling over 20 billion shekels for the benefit of reservists.”

“We suggest Ophir Katz focus on ensuring a functioning coalition,” the statement added.

In a scathing report on Tuesday, State Comptroller Matanyahu Englman called on Smotrich, among others, for insufficient preparations for future emergencies following the COVID-19 pandemic, which would have made it easier to protect the Israeli economy during the war in Gaza.