In a stinging defeat for Finance Minister Betzalel Smotrich and an embarrassment to Prime Minister Binyamin Netanyahu, the Knesset overnight Monday voted down Smotrich’s order doubling the VAT exemption on overseas online purchases from $75 to $150.

The vote was an unprecedented political drama, as it was the first time since the government was formed that opposition MKs, joined by numerous coalition members—mainly from the Likud—succeeded in overturning an order against the position of Netanyahu, despite his frantic efforts until the last minute to secure a majority.

The background to the incident is that although Smotrich’s order was welcomed by the majority of Israelis, small business owners whose sales would be negatively affected by the measure managed to win the support of many prominent Likud members, prompting an internal rebellion. Netanyahu, preoccupied with sensitive security discussions regarding a potential US strike on Iran, made efforts until the last minute to persuade Likud members to vote for the measure—unsuccessfully. After realizing that he had failed to win a majority, he was forced to declare a “free” vote—leading to the order being toppled 59-25.

Likud members who voted against the bill include Economy Minister Nir Barkat, Knesset Finance Committee chair Chanoch Milwidsky, and MKs Eli Dalal, David Bitan, Yuli Edelstein, Sasson Guetta, Shalom Danino, and Osher Shklalim. Otzma Yehudit members Minister Amichai Eliyahu and MK Limor Son Har-Melech also voted against the bill along with New Hope MKs Michael Biton and Akram Hasson, UTJ MK Yitzchak Goldknopf, and Noam chairman Avi Maoz.

Senior Likud ministers—including Yariv Levin, Yisrael Katz, and Avi Dichter—chose to be absent from the plenum, while most of the Shas and Degel HaTorah MKs voted in favor.

MK Eli Dalal explained his rejection of the bill, saying, “This activity is a death sentence for the business sector. I’m talking about small businesses.” He added that the high cost of living in Israel is due to the prices of housing, rent, and food, and “unfortunately those haven’t been addressed over the past three years.”

Smotrich responded to the vote by announcing that he will soon sign the order again. “The economic left in Likud is trying to defeat Israeli citizens in the service of monopolies and for a few votes in the primaries,” he said. “While Prime Minister Netanyahu is preoccupied with Israel’s security, a handful of Likud MKs are busy with petty politics and, together with the opposition, want to make us all pay dearly.”

“I will not let the public lose. Narrow personal interests will not defeat the good of Israel’s citizens. I do not intend to give up and surrender to the left. B’ezrat Hashem, I will sign a new order and continue to look after Israeli citizens. Despite the left, things can be affordable here.”

Opposition leader Yair Lapid rushed to celebrate the defeat, stating: “Netanyahu has no coalition, and his government is falling apart. He doesn’t even control his own party. He and Smotrich were humiliated again today in the plenum. We will continue to fight in the Knesset against the worst government in the state’s history.”

(YWN Israel Desk—Jerusalem)