With war costs rising throughout the year, anticipation for the 2025 budget is growing, and government approval is expected to be delayed longer than usual.
This is why the Ministry of Finance, autonomously, is preparing a series of spending cuts and tax increases to achieve the budget goals that are coming. The government agency hopes with these new measures to reduce spending by about 25 billion NIS, that is, more than 6 million dollars.
In addition to the increase in military and civilian spending that continues since the October 7 Hamas attack, the Fitch rating agency has just lowered the country's credit rating due to geopolitical risks and the impact of fighting on finances.
All these factors force the government to provide responses, and in the near future make an effort to sustain fiscal responsibility.
The emergency measures that the ministry is working on include the merger of the two lowest income tax brackets and, in addition, the possibility of going back on several tax changes and benefits that were already planned for 2025 is being evaluated.
The state budget for 2025 had to be approved by the Knesset before the end of the year so that the measures could take effect in January. If the budget is not approved before March 31, the government would be forced to call early elections.