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Through a new perspective that draws on the theoretical insights of Fiscal Sociology, the article explores the role of fiscal imperatives for periods of welfare state expansion. By tracing the process of social insurance (SI) financing decisions in the early 1970s, a critical juncture in the development of the Israeli welfare state, the article challenges the implicit assumption in the literature that SI financing is solely aimed at covering the costs of its programmes. The findings show that SI contributions can be driven by ‘nonsocial’ motives related to the state’s broader fiscal concerns. Furthermore, and in contrast to the tendency to associate fiscal imperatives with retrenchment policies and austerity, the article shows that fiscal relations between the state and its SI system can have also positive effects on the welfare state, leading to new entitlements and increased expenditures. [ABSTRACT FROM AUTHOR]