Finance Minister Bezalel Smotrich's order to double the VAT exemption ceiling on personal imports to $150 was struck down in the Knesset plenum late on Monday night after it failed to secure the support of numerous coalition lawmakers.
The order was rejected by a wide margin, with 59 MKs against and 25 in favor. Within the coalition, a group of lawmakers from Prime Minister Benjamin Netanyahu’s Likud Party joined forces to oppose the measure.
Netanyahu did not arrive at the Knesset plenum to vote.
The finance minister’s order is said to be aimed at lowering the cost of living in the country and reducing prices for online purchases. Critics say it will significantly harm local businesses.
Netanyahu's government had approved Smotrich’s order on Sunday. However, it still had to be finalized through the vote in the Knesset plenum, which was delayed into the late night amid negotiations aimed at securing a majority.
Smotrich vows to continue pushing for measure's passage
Smotrich vowed to the plenum, ahead of the vote, that he would continue to push for the measure's passage if it was struck down.
“If this order falls, I will sign a new order, because I am determined to reduce the cost of living,” he said.
“I hope we will sign a new order in the coming hours,” Smortich added on Tuesday morning in an Army Radio interview. “There were political and narrow, self-interested considerations against the prime minister,” he said.
MK Eli Dalal (Likud) told the plenum ahead of the vote that the measure “amounts to a death sentence for the business sector.”
“I am talking here about small businesses. The cost of living lies in housing, rent, and food, and unfortunately, those areas have not been addressed over the past three years,” he said.
Smotrich slammed the coalition after the vote, calling those in the Likud who voted against it the “economic Left."
“While Prime Minister Netanyahu is focused on Israel’s security, a handful of Likud MKs are engaged in petty politics and, together with the opposition, want to make all of us pay more,” the finance minister said.
“I do not intend to give up or surrender to the Left. With God’s help, I will sign a new order and continue to look after the citizens of Israel,” he added.
The opposition celebrated and cheered in the plenum when it was announced that the order had been rejected.
After the vote, opposition leader MK Yair Lapid (Yesh Atid) said Netanyahu and Smotrich had been humiliated in the plenum.
“Netanyahu has no coalition, and his government is falling apart. He does not even control his own party,” Lapid stated.
The Democrats leader, Yair Golan, said, “Netanyahu and Smotrich once again prove that managing a coalition is apparently a project that’s a bit too big for them.”
“A finance minister disconnected from the economy, and a prime minister who cannot muster a majority even for a simple personal import order. Embarrassing,” he added.
Knesset Finance Committee chairperson Hanoch Mildwisky (Likud) has been a leading critic of Smotrich’s measure.
Throughout Monday, dozens of business owners from across the country arrived at his committee and demonstrated at the Knesset against Smotrich’s order.
A self-employed business owner told the Knesset panel that if the order wasn’t canceled, the government would be “ issuing a death sentence for many business owners.”
“It’s Purim, and we can’t sell costumes; everything comes from AliExpress,” the business owner noted.
“We think this is a very bad proposal,” Milwidsky told the panel.
“It’s a slap in the face to businesses,” he noted, and said that he had attempted to discuss the matter with the finance minister, which was not helpful
Smotrich has also been leading efforts to advance a controversial reform of Israel’s dairy sector, which has raised concerns over expected shutdowns of hundreds of local dairy farms.
The dairy reform calls for addressing monopolies by opening the economy to free imports without tariffs. Likud lawmakers have also expressed firm opposition to it, with Agriculture and Raw Food Security Minister Avi Dichter (Likud) a vocal critic.