On Tuesday, Finance Minister Bezalel Smotrich told reporters that the passage of the state budget is expected to be delayed until late January 2025. Smotrich also said that the military would have to face budget restrictions starting in 2025 and expressed his intention to move forward with his proposed tax reforms by the end of the year.
Histadrut Chair Arnon Bar-David spent many hours at the Ministry of Finance yesterday, including a meeting with Smotrich. Bar-David made clear that the Histadrut is willing to get on board with the Ministry of Finances plan, but only in the event that the government shows an ability to responsibly manage the state’s funds.
The emerging agreement between the Histadrut and the Ministry of Finance will likely involve workers receiving two additional paid days off alongside a freeze on raises in the public sector. Bar-David said that he would sign an agreement only after seeing the decision made in the government budget meetings. A previous plan to reduce funding to pension funds was also taken off the table.
According to Smotrich, the budget will involve closing five government ministries—a move that is expected to save only about 40 million shekels ($11 million). Smotrich criticized National Security Minister Itamar Ben-Gvir’s request to increase his ministry’s budget by 20 billion shekels ($5 billion), noting that the ministry had received an additional 13 billion shekels ($3.5 billion) since the start of the war and approval to fill an additional 3,600 positions in the ministry, 2,000 of which are still not filled.
Smotrich said that the Finance Ministry has no intention of raising value-added tax, Israel’s equivalent of sales tax. He said that the ministry plans to cut National Insurance allowances, including those provided to parents of fallen soldiers and to Holocaust survivors, for a period of three years. He also said that the state is evaluating freezing tax rates.
If the proposed cuts aren’t accepted, an alternative plan will involve raising the health care tax and imposing a driving tax of 0.15 shekels (4 cents) per kilometer for all drivers, Smotrich said.
He added that the government also plans to cut the budget of Israel’s Public Broadcasting Corporation. “It’s not so bad if next year there’s less original content,” he said.
This article was translated from Hebrew by Leah Schwartz.
