Israel Considers Deeper Fuel Tax Cut Amid Price Surge Concerns

Israeli Finance Minister Bezalel Smotrich is exploring a significant reduction in fuel taxes, proposing a one shekel decrease per liter instead of the previously approved half-shekel cut, which is set to expire at the end of October. This potential measure comes as fuel prices are projected to reach an all-time high of 8.27 shekels per liter for 95-octane self-service gasoline starting October 1st. The additional tax cut would cost the state nearly half a billion shekels.

Senior professional officials within the Finance Ministry have strongly opposed the proposed deeper tax reduction, citing its high cost and lack of a viable funding source. One official told Ynet that the move is "expensive and impossible to implement budget-wise" and suggested it could be seen as an attempt to "bribe voters" so close to the upcoming elections. Concerns have also been raised about the legal counsel's approval, with doubts expressed whether the additional discount, unlike the previous one, will be permitted due to its potential classification as "election economics."

The Ministry of Energy announced that the price of gasoline will increase by 52 agorot on October 1st, bringing the self-service price to a record 8.27 shekels per liter. Full-service stations will see prices exceed 8.50 shekels. This situation echoes a similar tax reduction of a full shekel that was implemented for a short period in 2022, shortly before the previous elections, under then-Finance Minister Avigdor Lieberman.