Fuel Prices Set to Surge, Erasing Tax Cut Benefits for Drivers
Drivers in Israel may soon see the recent fuel tax reduction erased by a significant price hike, with experts predicting a jump of approximately 40 agorot per liter in October, potentially more. This increase is attributed to rising global oil prices and a strengthening US dollar. If these forecasts materialize, the price of a liter of self-service gasoline could reach at least 8.15 shekels.
The anticipated rise threatens to offset much of the 50 agorot per liter reduction in excise tax that Finance Minister Bezalel Smotrich implemented as a temporary measure until October 31. The benefit for drivers, intended to provide relief, could be largely nullified if oil prices and the dollar exchange rate continue their upward trend, pushing prices back towards pre-tax-cut levels.
This situation presents Smotrich with a dilemma: either further reduce taxes to prevent the price surge, a move that could face legal challenges and opposition from professional staff within the Finance Ministry, especially during an election period, or allow market forces to dictate the price increase.
The current price increase follows a peak in August when gasoline reached 8.25 shekels per liter, prompting the initial temporary tax cut. Now, within weeks, the gains for drivers are at risk of being quickly eroded by global market fluctuations.
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