JERUSALEM (JTA) — Israel’s Knesset approved the first reading of the 2013-14 state budget, which has been touted as closing socio-economic gaps in the country.

The budget, which cuts millions of dollars from the defense department, child benefits and transportation projects, was approved early Tuesday morning by a vote of 58-44.

It now moves to the Knesset Finance Committee for review and likely alterations before returning to the Knesset floor for approval on second and third readings.

The Knesset must approve the budget by the end of July or go to new elections.

Total spending in 2013 will be 388 billion shekels (nearly $108 billion), rising the next year to 408 billion shekels ($113.5 billion).

Along with the cuts, the austerity budget also increases income tax by 1.5 percent across the board.

“Rather than evading responsibility, we chose to do the responsible thing because Israel’s economy has no choice but to close the deficit as quickly as possible,” Finance Minister Yair Lapid said at the beginning of the budget debate Monday that stretched into the morning hours of Tuesday.

Many speeches by the opposition accused Lapid of harming the majority of Israelis with the budget proposal.

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