New state Budget Approval is set to be Delayed: The Knesset is Facing a Two-Week Postponement

The Knesset is set to face a delay in the approval of the new state budget for 2024, as senior officials in the Ministry of Finance confirm. The anticipated postponement, expected to last at least two weeks until March 4, comes as a result of delays in budget submission and approval processes.

Failure to secure approval by February 19, as mandated by law, triggers automatic budget cuts affecting government ministries. These cuts, amounting to hundreds of millions of shekels, will remain in effect until the budget receives final approval.

The delay primarily stems from Finance Minister Bezalel Smotrich's push to incorporate a significant portion of coalition funds into the base budget. However, legal constraints prevent their permanent inclusion, limiting their incorporation to the 2024 budget only.

Recent discussions within the Finance Committee highlighted adjustments to various budgetary measures. Notably, the cancellation of a proposed tax discrepancy between electronic and traditional cigarettes, and ongoing debates over carbon taxes, signal potential changes to fiscal policies.

Proposed tax increases, including a one percent rise in value-added tax and adjustments to health and National Insurance rates, face scrutiny. Despite opposition, a higher tax on major banks' profits is likely to proceed, contributing substantially to state revenues.

Amidst calls for increased support for the self-employed and debates over budget allocations for the Arab sector, certain budget items remain untouched. Despite objections, allocations for yeshivas and various cultural ministries are set to increase.

Furthermore, discussions regarding defense budget expansions underscore broader fiscal challenges. With projected costs of ongoing conflicts impacting the economy, additional defense expenditures remain contentious.

Despite limited time for further amendments, the Knesset's deliberations will shape the final budget. While some proposals face rejection, ongoing negotiations will determine the financial landscape for the year ahead.

The Knesset's handling of these fiscal matters bears significant implications for Israel's economic trajectory and broader policy priorities. As deliberations continue, stakeholders closely monitor developments amid the evolving budgetary landscape.