What Israel’s last-minute economic reforms mean for your wallet

A final Knesset legislative sprint approved measures targeting costly business loans, telephone scams, US imports, housing and construction waste, while major transport, open-banking and tax reforms were sidelined by political legislation A marathon legislative session in the Knesset immediately before its election recess produced a series of economic and consumer laws expected to have a direct impact on Israeli households and businesses. The measures include a new credit database intended to lower borrowing costs for small businesses, stricter rules governing telephone sales, expanded recognition of products approved under U.S. federal standards and accelerated housing planning. Gallery A marathon legislative session in the Knesset immediately before its election recess produced a series of economic and consumer law But the legislative push also ended in deep frustration at the Finance Ministry and Israel Tax Authority, where officials said critical structural reforms that had already cleared much of the parliamentary process were abandoned at the last moment. The shelved measures, some of which officials said could have generated billions of shekels for the state, are now unlikely to return before next spring. One of the most significant measures approved was the Small and Medium-Sized Business Credit Database Law, developed over the past year by the Bank of Israel and the Finance Ministry. The law, approved at around 1 a.m., is intended to address what policymakers describe as a fundamental failure in Israel’s credit market. Around 92% of small businesses currently obtain credit from banks, while 83% rely entirely on the bank where their account is held, leaving them with limited ability to compare offers or negotiate better terms. The new database is intended to increase competition between lenders. Officials estimate it could save businesses at least 1.5 billion shekels ($500 million) annually and reduce interest rates on business credit by at least one percentage point. The legislation also shortens the period for which negative credit information is recorded from three years to one, allowing consumers and business owners to recover more quickly from adverse financial records. The Knesset also approved an amendment to the Consumer Protection Law promoted by lawmaker Meirav Cohen, aimed at combating fraud and abuse in telephone sales. Under the new rules, businesses must record every telephone sales call involving a transaction worth more than 750 shekels ($250), retain the recording for two years and provide it to the customer free of charge within 10 business days. When a business fails to produce the recording, the consumer’s version of the conversation will automatically be presumed accurate. The measure represents a major shift in the balance of power between consumers and companies engaged in telephone marketing. According to the Consumer Protection Authority, telephone-based financial scams cause an estimated 500 million shekels ($166 million) in damage annually, with older people particularly vulnerable. The law will apply to high-risk sectors including tax-refund services, loan brokerage and telemarketing. Banks and insurance companies will also be covered for the first time. Violations could result in fines of 14,750 shekels ($4,900) for an individual business owner and 26,500 shekels ($8,800) for a corporation. Lawmakers also approved the “What Is Good for the United States Is Good for Israel” reform promoted by Economy Minister Nir Barkat. The law is intended to open Israel’s market to products that meet U.S. federal standards, allowing them to be imported, manufactured and sold without having to clear additional Israeli regulatory barriers. The reform will be introduced in stages. Its first phase, scheduled to begin in 2027, will cover baby products, toys, strollers, children’s beds and cleaning materials. Supporters say the measure will increase parallel imports, expand competition and reduce prices. Its effectiveness, however, will depend on how broadly it is implemented and whether importers pass their savings on to consumers. In the housing sector, the Knesset temporarily extended the law governing the Planning Committee for Priority Housing Areas, known by its Hebrew acronym Vatmal. The fast-track planning body, which is currently advancing about 228,000 housing units, will focus much of its work on strengthening northern border communities and southern cities including Ashkelon and Netivot. It will also promote tens of thousands of apartments through urban-renewal and evacuation-reconstruction projects in city centers, a move intended to increase housing supply and help ease prices. Lawmakers separately approved legislation regulating construction waste, aimed at curbing the illegal dumping of some 7.3 million metric tons of waste each year. The law changes the industry’s financial model by making payment to waste haulers conditional on trucks reaching an authorized and monitored disposal site. For the first time, operators will be subject to licensing requirements, service standards and continuous monitoring. Despite the laws that passed, senior officials at the Finance Ministry and Israel Tax Authority expressed anger over several economic reforms that stalled despite being ready for final approval. “Only because religious and political legislation took over the entire agenda during the final week, this Knesset pushed economic legislation aside,” senior economic officials said. The abandoned measures included open-banking legislation, regulation of hedge funds and an updated tax on electronic cigarettes. The e-cigarette tax was intended to reduce smoking among young people while generating an estimated 1 billion shekels ($332 million) in state revenue. Officials said the most consequential failure was the postponement of legislation establishing metropolitan transportation authorities, which was intended to address Israel’s chronic traffic congestion. Finance Minister Bezalel Smotrich had explicitly promised to advance several of the measures, but they were ultimately left off the final legislative agenda. A senior Finance Ministry official said the Knesset had spent days advancing laws serving narrow political and religious interests while abandoning structural reforms developed over the course of an entire year. “The Knesset preferred to legislate around the clock on draft evasion, kosher regulation and communications,” the official said. “All the whims of the ultra-Orthodox parties that harm the budget and the economy, including laws preventing the arrest of draft evaders and legislation concerning Torah students, were given priority over rigorous structural reforms that took a full year to formulate and have now effectively gone to waste.” The result is a mixed economic legacy: several reforms that could reduce borrowing costs, strengthen consumer protections and expand imports were approved, while broader changes to transportation, banking and taxation were postponed once again.