The Ministry of Finance submitted the budget for next year for Knesset approval. The budget will be put to a first call vote on Monday and is expected to win support from the coalition parties. Afterwards, it will be transferred to the Knesset Finance Committee for discussions, except for the Defense Budget sections that will be discussed in a joint committee with the Foreign Affairs and Defense Committee. At the end of the discussions, the budget will be submitted for final approval in the second and third calls.
15 billion NIS to the north, 9 billion to reserve soldiers
The new budget will be 607.4 billion NIS , and alongside it, the government approved budgetary adjustment measures of 37 billion NIS . The purpose of the budget is to meet the security and civilian needs, certainty for the business sector and the high-tech industry, steps to accelerate the economy, large investment in the northern and western Negev and support for reserve workers.
The adjustments will include, among other things, the allocation of 15 billion NIS in favor of a comprehensive rehabilitation program for the northern communities, 9 billion that will be provided with a support program for reserve soldiers and their families, as well as the promotion of waste removal reforms, the acceleration of the high-tech sector, the encouragement of ultra-Orthodox employment, and the encouragement of the housing market.
How will the delay in the budget be affected?
The budget was submitted more than a month late than the date set by the law, and less than a month before the end of the year. Accordingly, the year 2025 is expected to open with the 1/12 budget, a budget based on the 2024 budget, which is not fully adapted to the needs of the new year. The Minister of Finance, Bezalel Smotrich, noted that the delay was caused by budget uncertainty following the war in the north, But in his opinion, “It’s not a bad thing for the economy to run on January 1/12 – usually not much happens in January anyway,” the minister said on the Finance Committee.
The new tax measures
In the meantime, even before the budget is approved, the Ministry of Finance is required to approve tax measures in order to apply them to the new year. As of January 1, the following tax measures will take effect:
Freezing income tax and credit points.
Increase in Social Security payments.
Freezing children’s allowances.
Taxation of the “imprisoned profits” of the business sector.
Increase to 18%.
Additional costs will be added to the consumer as of January 2025. The municipal taxes will increase by 5.3%, electricity will increase by 3.8%, and water prices will increase by 3.4%.
The Finance Minister said that “the main goal of the 2025 budget is to maintain the security of the state and achieve victory on all fronts, while maintaining the strength of the Israeli economy.” The minister added that “this is a responsible and convened budget, with Israeli society as a whole carrying a burden, headed by the public sector and government ministries, so that the burden is divided between everyone without overloading one sector or another.”
