Israel Cuts Fuel Tax by Half a Shekel for Two Months

Israeli Finance Minister Bezalel Smotrich signed an order reducing the fuel excise tax by half a shekel per liter for a period of two months. This measure, effective from midnight Sunday, will lower the price of a liter of 95-octane gasoline from 8.25 shekels to 7.75 shekels, providing significant relief to drivers.

The decision follows Smotrich's directive earlier in the week for the Finance Ministry to prepare for an immediate excise tax cut, prompted by a sharp rise in fuel prices that was projected to reach an all-time high. The move is a response to geopolitical tensions in the Persian Gulf and a 6.4% increase in global crude oil prices.

The plan received full backing from all professional elements within the Finance Ministry, including its internal legal counsel, which recommended swift action to the Attorney General. Ministry officials had warned about the broader economic impact of high fuel costs and stressed the need for immediate intervention.

The Attorney General ultimately approved the reduction after reviewing the Finance Minister's position and the ministry's assessment, concluding that a substantial cut to the fuel excise tax was feasible. The reduction is expected to directly lessen the tax burden on drivers and ease transportation costs.

This temporary reduction will be in effect for two months, after which the Finance Ministry will re-evaluate the situation and decide whether to extend the measure based on the geopolitical climate and global oil prices. Previously, fuel prices were set to reach a record high of 8.25 shekels per liter in September due to tensions between the US and Iran and the closure of the Strait of Hormuz. Taxes, including excise and VAT, constitute approximately 59% of the final fuel price in Israel.