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Israel Cabinet Passes First State Budget in 3 Years

Israel has not had a new budget passed since 2018.

After an all day and night marathon session, Israel’s cabinet has finally agreed on a new state budget. Should this budget pass, it will be the first one that Israel has had in three years.

Israel went to the polls in April 2019. No government was formed, so new elections were held again, and again. There were three elections during a one year period. Through all that time, there was only what is known as a caretaker government in the country, which could not push through a new budget.

Israel was forced to get by with an annual extension of its old budget. Last fall, Prime Minister Netanyahu’s government disbanded and new elections were called without a new budget for 2021 first being approved. So Israel has waited all this time for a new full state budget.

The 2021-2022 Israel state budget will be $187 billion for 2021 and $173 billion for 2022. The budget includes new “sin” taxes on drinks high in sugar content like cola, additional taxes on disposable plasticware implemented out of environmental concerns and the assessment of Israel’s value added tax on items that Israelis order from abroad, in addition to any import duties collected.

The new taxes are a needed measure to help pay off a national debt that soared over the last 18 months due to the Covid crisis.

New spending includes NIS 58 billion ($17.8 billion) for the defense budget for 2022 and an NIS 2 billion ($619 million) increase in funding for health care. Health Minister Nitzan Horowitz had threatened to vote against any budget that did not shore up what he says is a health system on the brink of bankruptcy.

With just a one seat majority in the Knesset, the current coalition government cannot afford any defections on the budget. If a government fails to pass a new state budget by a certain deadline, it is, by law, automatically dissolved and new elections are called. That is what brought down former Prime Minister Binyamin Netanyahu’s last government.

Israel Prime Minister Naftali Bennet was in a celebratory mood saying, “In a good hour, Israel gets back to work.”

Prime Minister Bennet called the new budget “a budget of a government that cares.” He added, “After three years of stagnation, Israel is back to work.”

In a show of concern over possible opposition from within his coalition, Bennet asked the members of his government to, “understand the magnitude of the moment: after years of neglect, this morning we are bringing in the most daring, most competitive budget, the most helpful to the weaker sections and the most concerned about the future of our children for years.”

“In 2021 we sow the future of our children and grandson for the year 2051,” said the Prime Minister.

Finance Minister Avigdor Lieberman added, “we passed a responsible budget in the government alongside an unprecedented arrangements law and thus brought a huge line to the citizens of the state.”

“The reforms we have approved focus primarily on lowering the cost of living, we have invested huge budgets in infrastructure, transportation and real estate, and we have implemented significant reforms that will lower barriers and reduce bureaucracy, making it easier for everyone in our day-to-day business, business or private life,” said Lieberman.

Álso revealing concern over the final passage of the budget, Avigdor Lieberman said, “The path to approving the budget in the Knesset begins right now and together, while maintaining cooperation, we will pass it in 3 readings and ensure economic growth and governmental stability for the citizens of the State of Israel.”

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