Just last week, the framework of the updated state budget for 2023 of the State of Israel was approved.
What exactly is the state budget?
The budget is a means for the government to determine its level of expenditure and implement the priorities it has set. Like any budget, it consists of items that represent activity, and the allocation to the various items is the one in which it is possible to examine which activity of the government receives which amount, and the variance between the items.
The budget has three main components:
• Government expenditure – funds that enable the government's own activity, such as expenditures for defense and police, for maintaining the judicial system, and more.
• Transfer payments - transferred to citizens, such as child allowances, disability allowances, etc.
• Investments – for the development of infrastructure such as roads, ports, etc.
The budget must be determined by law approved by the Knesset. If the budget is not approved on time, the Knesset dissolves and new elections are held. The budget has an impact on the lives of each and every resident of Israel, both on the income side and on the expenditure side. On the revenue side, we pay income tax on the salary we receive and this money is transferred to the government. When we buy or sell food, an apartment, a car, securities on the stock exchange and more, the tax we pay goes to the state.
On the government's expenditure side, there are items such as education, which is one of the largest items, but its results in international comparisons do not give Israel a very high place.
Another large item is the defense item, the percentage of which is high in international comparisons. Another large part of the budget is allocated to debt repayment, both for interest payments and principal repayments. Other significant items are investments in infrastructure and healthcare. The allocation of funds to expenditure areas is, of course, politically influenced.
As we have seen, even if we were not aware of it, our lives in Israel are affected by and influence the state budget. While most of us do not have a direct impact on the allocation of expenses in the budget, it is important to know and be aware of the significant impact on our daily lives.
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