Smotrich Fuel Tax Expiry May Push Israeli Gasoline Past Nine Shekels
A temporary reduction in excise duties ends November 3, coinciding with a 10% rise in global oil costs that could raise pump prices from 7.77 to over 9 NIS per liter.
By John Laurent ·
The cost of 95-octane gasoline in Israel may exceed nine shekels per liter by the end of next week.
Finance Minister Bezalel Smotrich is set to let a temporary reduction in the state's excise tax on fuel expire on November 3. This deadline falls immediately after the national elections. The lapse of the tax break, combined with a recent 10% increase in global oil prices, creates conditions for a sharp jump in consumer costs. The current price for 95-octane gasoline stands at 7.77 NIS per liter.
Smotrich implemented the tax cut last month to moderate fuel costs ahead of the vote. An initial order signed a month prior had lowered the tax by half a shekel per liter. As oil prices climbed, the finance minister doubled that reduction to 1 NIS. Under standard conditions, taxes constitute more than 60% of the final price of gasoline in Israel. The Finance Ministry's Budget Department estimates that the reductions applied over the past two months will cost the state approximately 467 million NIS. This expenditure occurs while defense spending has reached record levels due to the ongoing war.
The final determination of the new price will be made toward the end of this week, based on oil prices in the Mediterranean basin. The first price adjustment is expected to take effect as early as Saturday night. The Fuel Administration at the Energy Ministry set the current October price in late September, before the recent surge in oil costs. That surge has been driven by expectations of a third round of fighting involving Israel, Iran, and the United States.
If Smotrich allows the tax relief to lapse, the price of gasoline could climb above the 9 NIS mark. Even if the tax cut remains in place, analysts expect a rise of approximately 30 agorot per liter, which would bring the price to just over 8 NIS. Smotrich will decide on extending the relief after the elections. If the current government is likely to lose power, he may choose to allow prices to rise, leaving the economic adjustment to the next administration.
The new price may remain in effect for only a few days. The short duration reflects the volatile nature of oil markets and the political uncertainty surrounding the upcoming government formation.
Source: The Jerusalem Post
