Smotrich Threatens Coalition Freeze Over Tax Credits for IDF Reservists

Finance Minister Bezalel Smotrich has issued a bold ultimatum to Israel’s ruling coalition: unless his bill granting tax benefits to IDF reservists advances immediately, his Religious Zionist Party (RZP) will halt all coalition voting.

“Against the backdrop of Likud’s refusal to advance Smotrich’s bill to provide tax benefits for reservists, the Religious Zionist Party will not vote with the coalition,” the party declared on Wednesday. The bill, which has passed its initial stages but still requires second and third Knesset readings, proposes tax credit points based on the number of days served in IDF reserve duty.

The bill outlines:

• Half a credit point for 30–39 days of reserve service

• Three-quarters for 40–49 days

• One full credit point for 50 days

• Additional quarter points for every five extra days, capped at four points

However, Coalition Whip Ofir Katz (Likud) responded sharply, warning that the current draft discriminates against lower-income reservists and students, who are less likely to benefit from the tax relief due to their income brackets.

Katz criticized Smotrich’s rigid stance, saying, “It’s regrettable that someone who for years opposed ultimatums and boycotts is now engaging in one himself.” He emphasized that the Finance Committee, led by Hanoch Milwidsky (Likud), supports broad reforms to ensure the law benefits all reservists, not just high earners.

This internal coalition standoff arrives at a precarious time: the government lacks a full majority, with two ultra-Orthodox parties having stepped back from voting following disputes over the haredi draft exemption bill.

Smotrich’s move is being viewed as a high-stakes play to solidify support for Israel’s reservists, who have played a central role during the war with Hamas. Critics argue that while the intention is noble, the bill in its current form could deepen social inequality by excluding vulnerable demographics.

Supporters of the proposal say it’s a long-overdue acknowledgment of the sacrifices made by reservists, many of whom have left families and businesses behind during extended military operations. But until consensus is reached, the legislation and potentially the stability of the coalition itself remains in limbo.

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