Israel Cuts Fuel Tax by Half a Shekel Amid Price Surge

Israel's fuel prices are set to decrease immediately by 50 agorot (half a shekel) per liter following the government's decision to temporarily reduce excise tax on gasoline. Attorney General Gali Baharav-Miara approved the measure for Finance Minister Bezalel Smotrich, who is expected to sign the order imminently. The reduction will bring the price of a liter of 95-octane self-service gasoline down from 8.25 shekels to 7.75 shekels.

The Finance Ministry stated the move aims to curb the impact of a sharp rise in global fuel prices on the Israeli economy. This tax cut is planned to be in effect for two months, until October 31. The decision was made after the Finance Ministry's legal counsel determined that such a tax reduction is permissible even close to an election period, citing a precedent from when Avigdor Lieberman served as Finance Minister.

Fuel prices in Israel had reached their highest point since September 2012 on September 1, climbing to 8.25 shekels per liter. This increase was attributed to rising global gasoline prices, refinery margins, currency exchange rate fluctuations, adjustments to the excise tax, and changes in marketing margins and full-service surcharges. The excise tax itself, which is subject to VAT, was recently increased by 5 agorot per liter as part of a mechanism linked to the consumer price index, bringing the total excise tax on gasoline to over 3.65 shekels per liter.