The coalition on Tuesday overcame serious challenges and passed a key tax bill into law by a one-vote margin.Failure to pass the bill by the end of the calendar year would have created a large gap in national income for 2025 and could have brought down the government.
Difficulties to pass the bill arose already on Monday, as the hassidic Agudat Yisrael faction’s three MKs said they would not support the bill due to the government’s delay in issuing a new law to regulate haredi (ultra-Orthodox) IDF service.Agudat Yisrael joined a previous threat by National Security Minister MK Itamar Ben-Gvir that his party’s six MKs would oppose the bill due to his dissatisfaction with his ministry’s expected 2025 budget.
The coalition enjoys a 68-52 majority. However, Ben-Gvir’s pledge to oppose the bill shrunk the majority to 62-58. An abstention by all three of Agudat Yisrael’s MKs, coupled with the absence of former defense minister Yoav Gallant, who has not voted along coalition lines since being removed from his position in November, could have killed the bill.
The bill in question is the largest reform in the package of bills accompanying the 2025 budget, which are now making their way through the legislative process. Known as the “Trapped Profits Bill,” its aim was to close a loophole that enabled certain companies to avoid paying taxes on profits that have not been reinvested or distributed as dividends.
Dramatic buildup
According to Finance Ministry estimates, the new bill would create NIS 9.25 billion in income for 2025, and then NIS 4.35b. every year from 2026 onwards.
The hours leading up to the vote were dramatic, as the coalition scrambled to ensure a majority. Prime Minister Benjamin Netanyahu left Hadassah-University Medical Center in Jerusalem’s Ein Kerem less than 48 hours after undergoing prostate removal surgery, and Likud MK Boaz Bismuth also arrived despite him sitting shiva for his mother.
The coalition ended up succeeding by convincing Otzma Yehudit MK Almog Cohen to break party lines and support the bill. Cohen, who has a strained relationship with Ben-Gvir, said following the vote that he “refused to destabilize the right-wing coalition” and enable a new government to form with the support of Arab parties. Agudat Yisrael MK Yaakov Tessler voted against the bill but the other two MKs abstained, giving the coalition a narrow 59-58 win.
Netanyahu issued a statement following the bill’s passage titled “An important day and big victory for the coalition.”
The prime minister called on “all members of the coalition, including Minister Ben-Gvir, to cease rocking the coalition and endangering the existence of a right-wing government during a momentous time in the annals of Israel.”
Netanyahu added that he “backed the finance minister [Bezalel Smotrich] over the responsible way he is leading the budget and Israeli economy.”
Smotrich and Ben-Gvir continued an ongoing spat after the bill’s passage. Smotrich blamed Ben-Gvir for forcing Netanyahu to leave his “sickbed” and endanger the government in favor of “spins and spewing slogans into the air.”
Ben-Gvir released a statement during the vote calling the budget “irresponsible and vengeful,” and blamed Smotrich for causing Netanyahu to attend the vote by “refusing to conduct any negotiations” over his ministry’s budget.
Ben-Gvir had argued earlier that his ministry should be exempt from government-wide budget cuts, and that the cuts would negatively affect police performance while violating a previous agreement regarding a raise in police officer’s salaries.
Following the vote, Ben-Gvir said he was “proud to fight for Israeli security” and that “a right-wing government is not just in words.”