Israel Fuel Tax Cut: Government Acts to Prevent Price Spike

Israel's Finance Ministry announced Sunday that Finance Minister Bezalel Smotrich has directed officials to reduce the excise tax on gasoline in order to prevent an anticipated price increase stemming from the global energy crisis and ongoing tensions with Iran.

According to the ministry, "professional discussions are currently underway at the Finance Ministry to formulate the level of the reduction and the precise mechanism. The finance minister intends to sign the order as soon as possible so that the reduction can take effect in the coming days."

Earlier Sunday, the Energy and Infrastructure Ministry updated fuel prices for September, which are scheduled to take effect at midnight between Monday and Tuesday (September 1). Under the planned increase, the maximum price for a liter of 95-octane unleaded gasoline would rise by 16 agorot to 8.25 shekels per liter. The surcharge for full service would stand at 26 agorot per liter (including VAT), an increase of 1 agora from the previous update.

In Eilat, where VAT does not apply, the maximum price per liter would reach 6.99 shekels, an increase of 14 agorot from the previous month.

The price increase is driven by rising global oil costs, attributed to U.S.-Iran tensions and the closure of the Strait of Hormuz, which pushed crude oil prices up by 6.4%. The increase was partially offset by a 2.95% decline in the dollar exchange rate.

Of the current price per liter of gasoline, 3.66 shekels goes to excise tax and another 1.26 shekels to VAT, totaling 4.62 shekels per liter, or 59% of the final price.

The scheduled increase would have brought fuel prices to an all-time high in Israel.