Israel to Cut Fuel Tax to Prevent Price Hike Amid Global Energy Crisis

Israel's Ministry of Finance has announced that it will reduce the excise tax (Mas Halo) on gasoline to prevent a significant price increase expected to take effect on September 1st. Finance Minister Bezalel Smotrich ordered the measure to counteract rising global energy prices and tensions with Iran, which have driven up crude oil costs.

Professionals within the Finance Ministry are currently discussing the exact amount of the reduction and the mechanism for its implementation. Smotrich intends to sign the order quickly, aiming for the tax cut to take effect within days. This move is designed to avert a record-high fuel price in Israel.

The Ministry of Energy and Infrastructure had previously updated the fuel prices for September, which were set to rise at midnight between Monday and Tuesday. The planned increase was 16 agorot per liter of 95-octane unleaded gasoline, bringing the price to 8.25 shekels. The surcharge for full service was also slated to increase slightly.

These price hikes were attributed to a global increase in oil prices, exacerbated by tensions between the United States and Iran and the closure of the Strait of Hormuz, leading to a 6.4% rise in crude oil costs. A 2.95% drop in the dollar's exchange rate had partially offset this increase.

Currently, excise tax and VAT constitute 59% of the final gasoline price, totaling 4.62 shekels per liter. The Finance Ministry's proposed reduction in the excise tax aims to mitigate the upcoming price surge.