Israel's Finance Minister Pushes to Cut Fuel Tax Despite Professional Objections

Israeli Finance Minister Bezalel Smotrich is advancing a proposal to reduce the fuel excise tax by half a shekel per liter, a move aimed at mitigating an anticipated rise in gasoline prices for consumers. The proposal, which would cost the state approximately 300 million shekels per month, has received a recommendation for approval from the Finance Ministry's legal advisor, Dudi Kofman, despite strong opposition from the ministry's professional staff.

Kofman's legal opinion, submitted to Attorney General Gali Baharav-Miara, acknowledges that the tax cut deviates from the professional echelon's stance. However, he cited precedent from similar measures taken in Israel and other countries in 2022, and the need to alleviate the cost of living, as reasons for finding no legal impediment to the plan. The measure comes as the price of 95-octane gasoline has reached 8.25 shekels per liter.

Smotrich's office confirmed the initiative, stating the minister ordered the tax reduction to counteract expected price hikes stemming from the global energy crisis and ongoing tensions with Iran. Discussions are underway to finalize the exact reduction amount and mechanism, with the minister intending to sign the order soon for immediate effect.

Professional officials within the Finance Ministry have voiced sharp disapproval, estimating that a 10 agorot reduction per liter translates to a monthly revenue loss of about 30 million shekels. Concerns are also being raised about the legality of such a move during an election campaign, with fears it could be construed as electioneering economics. The proposal follows a recent 16 agorot increase in the maximum price of gasoline, attributed to a 6% rise in international oil prices and adjustments to the excise tax component.