By Steven Scheer
JERUSALEM, Dec 4 (Reuters) - Israel's cabinet began debate on the 2026 state budget plan that is likely to face an uphill battle and lead to new elections if not approved by March.
Ministers began what is usually a marathon session on Thursday ahead of a vote that could come early on Friday. If it passes, it heads to parliament for its initial vote.
According to Israeli law, the budget must be approved by parliament by the end of March, or new elections are triggered. The next election is slated for October 2026. The Finance Ministry believes a final vote will be held in March.
Israel's government has splintered in the past two years over the war in Gaza, the ceasefire that has halted it, and demands by ultra-Orthodox Jewish parties to exempt Jewish seminary students from mandatory military service.
BUDGET AIMS TO CUT LIVING COSTS
Finance Minister Bezalel Smotrich told a press conference ahead of the cabinet meeting that the budget and accompanying economic plan for 2026 would focus on reducing living costs. He lashed out at banks for "reaping enormous" profits at the public's expense during the war rather than providing credit to "challenging borrowers."
Israel will tax banks' excess profits while promoting more competition. Smotrich also criticised what he called monopolies that continue to raise prices.
Income taxes will be reduced.
"Things can be cheaper," he said. "I am not against wealthy people, but I am against exploitation and abuse."
Prime Minister Benjamin Netanyahu said at the cabinet meeting the budget was responsible, balanced and met Israel's security needs. He said he was "certain" it would pass.
The budget consists of 760.6 billion shekels ($235 billion) of spending. The largest component is 90 billion shekels for defence. The budget deficit is set at 3.2% of GDP next year.
($1 = 3.2322 shekels)
(Reporting by Steven ScheerEditing by Rod Nickel)
