Tax hikes, 'belt tightening', 2025 war budget passed

Israeli Prime Minister Benjamin Netanyahu called it “a critical, challenging but necessary source of funding in a year of war.”

Smoke rises after an Israeli airstrike in Tyre, southern Lebanon, on October 23, amid ongoing fighting between Hezbollah forces and the Israeli army. (Source: Reuters)

On November 1, the Israeli Cabinet approved a 2025 war budget worth 607.4 billion shekels ($162 billion), which includes fiscal measures and tax increases to boost spending on ongoing military operations in the Gaza Strip and Lebanon.

The war budget will have to go through three rounds of voting in the Israeli parliament and is expected to be approved by the end of January 2025.

However, some tax increases are expected to be approved separately in advance. The main austerity measures include an increase in value-added tax (VAT) from 17% to 18% and a suspension of plans to increase child benefits.

Israeli Prime Minister Benjamin Netanyahu called it “a critical, challenging but necessary source of funding in a year of war.”

Meanwhile, Finance Minister Bezalel Smotrich described it as “a stable budget to address the needs of war and the major challenges facing the Israeli economy.”

In September, the Bank of Israel called for spending cuts and tax increases or other measures to increase revenue for the budget. However, Minister Smotrich said that raising taxes during a time of conflict is inappropriate.

Speaking at a press conference, Mr. Smotrich outlined the main points in building the budget, saying that Israel is spending the most ever on the conflict with Hamas and there will be no limit on spending on this.

Earlier in March, the Israeli parliament approved a revised 2024 budget bill, adding tens of billions of dollars to fund expenditures related to the ongoing conflict with the Hamas movement in the Gaza Strip.

With a 63-55 vote, the National Assembly passed the government's proposed budget of about $160 billion.

Israel’s military campaign against Hamas in Gaza and its conflict with Hezbollah in Lebanon over the past year have cost tens of billions of shekels, including on ammunition, equipment, the call-up of more than 300,000 reservists and support for the wounded and displaced.

Source: https://baoquocte.vn/israel-tang-thue-that-lung-buoc-bung-thong-qua-du-toan-ngan-sach-chien-tranh-nam-2025-292242.html