The Chareidi Hamodia newspaper, the mouthpiece of the largest party in Agudas Yisrael [Gerrer], declared on its front page on Monday morning that Agudas Yisrael MKs may vote against a critical part of the budget bill that is scheduled for a vote in the Knesset later on Wednesday.
The report stated: “There is no point in voting in favor of a specific tax when the most important thing for the Charedi community, lomdei Torah – has not yet been legislated.”
The implication is that if the government does not pass a Chareidi recruitment law, Agudas Yisrael will not commit to voting with the coalition on key bills needed to pass the state budget.
The report emphasized that the Agudat Yisrael MKs “have no interest in toppling the government.”
“The most valuable thing for the Charedi community – namely the Lomdei Torah who learn full time – has not yet been legally arranged,” the report stated. “As is known, the Chareidi parties in general, and Agudas Yisrael in particular, supported right-wing governments throughout the tumultuous election cycles in recent years, showing complete loyalty to the right-wing bloc. They indeed joined the current government, defined as ‘full right,’ and have accomplished significant achievements in various areas such as housing, welfare, finance, and more – and they have no interest in toppling the government.”
“However, the most valuable issue for the Chareidi community, which it made clear before entering the coalition and throughout the process – namely the status of full-time lomdei Torah, Am Yisrael’s existential asset, has not yet been regulated by the current coalition, despite all the requests, promises, and commitments – and they want to see actual deeds.”
Later on Wednesday morning, National Security Minister Itamar Ben-Gvir’s Otzma Yehudit party also announced that they will vote against the tax law due to what it claims is Finance Minister Betzalel Smotrich’s “persecution” of employees of Israel Police, Prison Services, and Fire and Rescue Services by cutting their salaries.
If both parties fulfill their threats, there will not be a majority for passing the “trapped profits” law, which is part of the budget law and must be passed in order to pass the state budget.
The “trapped profits” law, the main reform to the 2025 budget, is a complex law that will enable the state to collect tax on the estimated NIS 150 billion of trapped profits in personal service companies and is expected to bring about 10 billion shekels to the state treasury – already in 2025.
According to a Globes report, “‘trapped profits’ are profits accumulated in companies on which only companies tax, at a rate of 23%, has been paid. Only if the profits are distributed as a dividend will additional tax of up to 30%, plus a surtax in many cases, be payable as income tax.”
“The Ministry of Finance’s original proposal set a new tax of 2% annually on all trapped profits. In the course of the discussions, an alternative track was added, mainly intended for holding companies, whereby the tax can be replaced by a dividend distribution, at first of 5% of the accumulated amount, and 6% from 2026.”
Ai Maman CPA, a partner at the Rabinowitz Even Maman accounting firm, told Globes: “The Ministry of Finance wants to make up for the deficit caused by the war, and so in effect it is forcing shareholders to distribute a dividend even if they didn’t plan to do so.”
“In addition, the Ministry of Finance has created a new method calculating companies tax that will apply to companies from 2025, in which two rates of tax will apply to profits retained in a company: companies tax on profits representing up to 25% of turnover, and a marginal rate on profits in excess of this equivalent to the rate of tax payable by the shareholders. As a result of this calculation method, shareholders in a company will be able to accumulate much less trapped profits in future years.”
(YWN Israel Desk – Jerusalem)
Join the official YWN WhatsApp status
One Response
“The most valuable thing for the Charedi community – namely the Lomdei Torah who learn full time – has not yet been legally arranged,” the report stated.”
As the Charedim are not just arguing for the full-time learners but also part-time and no-time learners, it is unlikely a solution will be found.
Smotrich and Ben Gvir answer to their voters, the vast majority who are Daati Leumi. If they agree to a law that allows non full-time learners to avoid service, they will lose huge support from the Daati Leumi community as the majority of soldiers who have given their lives for E”Y in the last 14 1/2 months are from that segment of the population.
The Agudah and Degel need to put forward some form of a compromise or the government will surely fall. The left will then come into power which helps no one who cares about the Torah.