Israel Cuts Fuel Tax to Lower Gas Prices Amid Economic Concerns

Effective midnight on September 7, 2026, the price of 95-octane gasoline in Israel will decrease by 0.5 shekels, reaching 7.75 shekels per liter at self-service stations. This reduction follows a decision by the Ministry of Finance to lower the excise tax, a move approved by the government's legal advisor despite initial concerns about the cabinet's authority to address non-urgent matters during a period of restraint. Finance Ministry legal advisor Dudi Kopel pushed for the urgent measure due to high fuel prices, leading Finance Minister Bezalel Smotrich to sign the decree. The regulated fuel price had previously climbed from 6.85 shekels in January 2026 to a historic high of 8.25 shekels in September. The article notes that the recent sharp price increase was attributed to the war with Iran, the closure of the Strait of Hormuz, and rising natural gas prices in Europe. The tax cut will only apply to state-regulated gasoline, with the prices of diesel and liquefied gas remaining unchanged. The reduction in excise tax is estimated to cost the state approximately 155 million shekels per month, totaling around 310 million shekels. This funding will be covered by surplus funds from the Ministry of Finance, generated from exemptions on personal import taxes. Notably, a previous historic high for 95-octane gasoline was recorded in September 2012 at 8.25 shekels per liter, the same price point at which Prime Minister Benjamin Netanyahu first proposed a fuel excise tax reduction.