The Knesset Finance Committee on Tuesday approved the controversial “Daycare Law” for its first reading, advancing legislation that would continue government daycare subsidies for many chareidi families even if the father has not resolved his military service status.

The bill, sponsored by lawmakers from United Torah Judaism, Shas, and Otzma Yehudit, would base eligibility for daycare subsidies primarily on the mother’s employment status, rather than on whether the father is working or has fulfilled military service obligations.

The proposal passed despite strong opposition from professional officials in both the Finance Ministry and Justice Ministry, who warned of significant economic and constitutional concerns.

According to a position paper submitted by the Finance Ministry’s Budget Department, the legislation is expected to cost taxpayers approximately NIS 300 million annually. Of that amount, roughly NIS 200 million would go to households where the father is eligible for military service, while another NIS 100 million would benefit households where the father neither works nor is required to serve.

The legislation was originally introduced following a Supreme Court ruling that halted daycare subsidies for avreichim who had not regularized their military status. That ruling was intended to create an economic incentive for military service. The new bill seeks to restore eligibility by separating subsidy criteria from the father’s status and focusing solely on the mother’s employment.

Finance Ministry officials sharply criticized the proposal, arguing that it undermines two major national goals: increasing chareidi workforce participation and encouraging military service.

“The proposal clearly undermines” those objectives, the Budget Department wrote.

Officials argued that the bill weakens incentives for employment because families would continue receiving subsidies even when fathers remain outside the workforce. They also pointed to what they described as a built-in paradox: as a father’s income rises, the subsidy decreases, effectively rewarding non-employment.

The ministry further warned that the proposal is likely to significantly weaken economic incentives for military service among eligible chareidi men.

The legislation now moves to the Knesset for further consideration.

(YWN World Headquarters – NYC)