Israel to Cut Fuel Tax, Lowering Gasoline Prices Next Week

Israel's Ministry of Finance announced on Thursday that gasoline prices will decrease starting next week following a decision to cut the "blue" tax on fuel by 0.5 shekels per liter. The ministry published the draft order for the tax reduction on Thursday morning to allow for public feedback. The order is scheduled to be signed next Sunday after reviewing submitted comments.

The decision follows a recommendation from the Ministry of Finance's legal advisor, Dudi Koppel, to approve Finance Minister Bezalel Smotrich's initiative to lower fuel prices. This recommendation was made despite opposition from the professional staff within the ministry, who warned the move could be perceived as an election-related economic measure.

The Attorney General's office received the legal opinion from the Ministry of Finance's legal advisor on Wednesday evening. The opinion concluded there were no legal impediments to implementing the decision, noting similar measures were taken in Israel in 2022 and in other countries. The move is also framed as a necessary step to alleviate the burden of the rising cost of living.

This tax cut comes after gasoline prices in Israel rose in September to 8.25 shekels per liter, an increase of 16 agorot from the previous price. The director of the Fuel and Gas Administration at the Ministry of Energy and Infrastructure attributed the price hike partly to a global increase in gasoline prices of approximately 6%, partially offset by a roughly 3% decrease in the dollar exchange rate.