Israel Slashes Fuel Tax, Bringing Gas Prices Down Significantly

The price of 95-octane gasoline in Israel will drop by 50 agorot per liter, reaching 7.75 shekels, starting at midnight between Sunday and Monday. This reduction follows a temporary decrease in the fuel excise tax, a key component of the final fuel price. The move aims to alleviate the burden on drivers after a sharp increase in fuel costs, which had reached a record high of 8.25 shekels per liter this week.

The decision to lower the excise tax was approved by Finance Minister Bezalel Smotrich after receiving backing from legal advisors. Initially, there were concerns that the current government, considered transitional, might be restricted from making such decisions. However, the Finance Ministry's legal advisor, Dudi Koppel, argued that the tax reduction was an urgent measure due to high fuel prices and that its scope and duration were limited compared to previous tax cuts.

Koppel's position prevailed, paving the way for Smotrich to sign the order. The price hike over the past eight months was attributed to factors including the war with Iran, the closure of the Strait of Hormuz, and rising natural gas prices in Europe. Gasoline prices had steadily climbed from 6.85 shekels per liter in January to the record 8.25 shekels in September.

This tax adjustment specifically applies to state-regulated gasoline and will not affect diesel fuel or liquefied petroleum gas, whose prices are not regulated.