KUALA LUMPUR — To fund its war on Palestine and Lebanon, Israel’s cabinet has approved NIS250 billion (US$66.8 billion or RM292.6 billion) under its 2025 national budget.
The spending plan proposes higher taxes for Israelis, including by raising value-added tax to 18% from 17%, as well as spending cuts across most government ministries.
Cuts are also proposed to welfare benefits, including to the elderly, people with disabilities, Holocaust survivors and families of fallen soldiers, The Times of Israel reports.
The war funds are part of the overall NIS605 billion (US163 billion) budget for next year.
Other measures proposed to plug Israel’s fiscal deficit of NIS 40 billion (US$10.7 billion) are a freeze on civil service salaries and a freeze on raising the minimum wage.
Savings plans and pension funds that were previously tax-exempt will be taxed or have a bigger portion remitted to government coffers, various media also reported.
Reuters noted that Israel’s growth outlook for this year had been slashed to 0.4% by its finance ministry from an earlier projection of 1.1% after more than a year of bombarding the Gaza Strip in retaliation for the Oct 7 Hamas attacks last year.
Israel’s parliament will vote on the 2025 budget by January, according to its Finance Minister Bezalel Smotrich.
Reuters noted that failure to pass the spending plan by the end of March could spark new elections. – November 2, 2024