Knesset Rejects Smotrich's VAT Exemption Order Amid Coalition Tensions

Finance Minister Bezalel Smotrich's proposal to double the VAT exemption ceiling on personal imports to $150 was rejected by the Knesset plenum, with a vote tally of 59 against and 25 in favor. The measure aimed to alleviate the cost of living in Israel and reduce prices for online purchases. However, it faced significant opposition from within Prime Minister Benjamin Netanyahu's Likud Party, which contributed to its failure. Notably, Netanyahu did not participate in the vote.

The Jerusalem Post

The rejection of Smotrich's order has highlighted fractures within Netanyahu's coalition government. Smotrich expressed his determination to continue advocating for the measure, stating, “If this order falls, I will sign a new order, because I am determined to reduce the cost of living.” He criticized dissenting Likud members, labeling them as part of the “economic Left” and accusing them of engaging in "petty politics."

The Jerusalem Post

Opposition leaders, including MK Yair Lapid from Yesh Atid, celebrated the outcome, asserting that it demonstrated Netanyahu's weakened control over his coalition. Lapid remarked, “Netanyahu has no coalition, and his government is falling apart.” Yair Golan, leader of the Democrats, echoed this sentiment, describing the situation as embarrassing for both Netanyahu and Smotrich.

The Jerusalem Post

The proposal faced substantial backlash from business owners who argued that it would severely impact local enterprises. Knesset Finance Committee chairperson Hanoch Mildwisky, a member of Likud, was a vocal critic, stating that the measure would be a “death sentence for many business owners.” Demonstrations by business owners at the Knesset underscored their concerns, with one self-employed individual highlighting the negative impact on sales during the Purim season, stating, “It’s Purim, and we can’t sell costumes; everything comes from AliExpress.”

The Jerusalem Post

In the aftermath of the vote, Smotrich reaffirmed his commitment to addressing the cost of living, indicating plans to propose a new order soon. He stated, “With God’s help, I will sign a new order and continue to look after the citizens of Israel.” The rejection of the VAT exemption order raises questions about the stability of Netanyahu's coalition and the government's ability to implement economic reforms.

The Jerusalem Post

While the rejection of the VAT exemption order was met with celebration from the opposition, the internal dynamics of the Likud Party and the broader coalition remain unclear. The extent to which this vote will affect future legislative efforts and coalition stability is yet to be determined.

The Jerusalem Post

• “If this order falls, I will sign a new order, because I am determined to reduce the cost of living,” — Bezalel Smotrich, Finance Minister

The Jerusalem Post

• “Netanyahu has no coalition, and his government is falling apart.” — Yair Lapid, Opposition Leader

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• “It’s a slap in the face to businesses,” — Hanoch Mildwisky, Knesset Finance Committee Chairperson

The Jerusalem Post