“Israeli” Finance Minister Bezalel Smotrich presented his proposed state budget for 2025 during a press conference on Tuesday, outlining significant austerity measures in response to the prolonged and costly war in Gaza.

The budget proposal comes after weeks of intense internal discussions, marked by Smotrich's criticism of senior officials in his ministry and their exclusion from the decision-making process, Middle East Monitor reported.

The proposed budget reflects the economic strain caused by what Smotrich described as the longest and most expensive war in “Israel's” history, with direct costs estimated between NIS 200-250 billion (USD 54-68 billion).

To address the financial challenges, the budget includes several austerity measures aimed at stabilizing the economy.

Key measures in the budget proposal include:

• Freezing income tax brackets: To prevent increases in tax rates.
• Public sector pay freeze: A halt on salary increases for public employees.
• Minimum wage freeze: No increase in the minimum wage.
• Surtax on undistributed company profits: Additional tax on profits not distributed to shareholders.
• Abolishing VAT exemption for tourists: Removing the value-added tax exemption for tourists to increase revenue.

"We are at war," Smotrich stated. "But we will all win together on the economic front. Everyone is equally under the burden. No one will see less in their bank account, but yes, there will be freezes."

He added that despite the budget deficit rising beyond the expected 6.6 percent, he anticipates it will decrease by the end of the year, adhering to the deficit target for 2024.

Smotrich expressed pride in the government's handling of the economy during the past eleven months of war, highlighting improvements in national resilience, business stability, military readiness, and support for evacuees from aggression zones.

However, it remains uncertain whether Smotrich’s budget will gain approval.

“Israeli” media reports indicate that it is unclear if Prime Minister Benjamin Netanyahu supports the proposal or if coalition parties are in agreement.

The final decision on the budget's passage will depend on upcoming negotiations and political alignments.