Israel taxes its future to subsidize inaction

Israel's recent passage of its largest budget in history has drawn criticism for allocating NIS 800 million to yeshivas and ultra-Orthodox institutions. This funding comes at a time when many in these communities do not serve in the military, while reservists, including students, struggle with academic and financial burdens.

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This is not just a moral failure. It is an economic one. And it deserves to be called what it is: a system that taxes the future to subsidize inaction.

A 23-year-old engineering student returning from reserve duty found himself falling behind in classes, receiving only the legal minimum of NIS 311 per day. His tax benefits barely offset his expenses. This situation highlights a system that, according to the article, "taxes the future to subsidize inaction."

The economic consequences are significant, particularly for Israel's vital hi-tech sector, which accounts for 17% of GDP and 57% of exports. The Israel Innovation Authority reported a shrinking hi-tech workforce for the first time in a decade in 2025. This decline is attributed to reservists being exhausted, struggling to catch up with studies, or leaving the country.

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Our Iron Dome.

Between 2023 and 2024, approximately 90,000 Israelis, largely young, educated, and secular, emigrated. Researchers warn this trend could lead to a brain drain comparable to those seen in Venezuela and South Africa. The government's compensation system for reservists, offering a tax credit of NIS 242 per credit point per month, is deemed insufficient for students earning NIS 4,000 to 5,000 monthly, with 57% receiving only minimum compensation.

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The Finance Committee chairman admitted the original bill “discr