Israel's Finance Minister Proposes Fuel Tax Cut to Lower Gas Prices

Israeli Finance Minister Bezalel Smotrich is preparing an initiative aimed at halting the rise in gasoline prices and potentially lowering them for consumers. He has instructed his ministry's staff to develop a mechanism for additional fuel subsidies, according to a report by Ynet. The goal is to cap price increases amid the global energy crisis. Smotrich has discussed the proposal, including its economic implications, with relevant experts. The announcement comes less than a month before elections and shortly after a record surge in gasoline prices in Israel, with a liter reaching 8.27 shekels. The new price was set to take effect on October 1st.

Smotrich's proposal involves an additional reduction in fuel excise tax until the end of October, which would lower the price per liter by 1 shekel. Currently, a tax reduction is in place, saving drivers approximately 0.50 shekels per liter. This new measure is estimated to cost the state budget around 500 million shekels due to reduced tax revenue.

The initiative's timing, just before elections, raises questions about its approval by the Ministry of Justice's legal advisor. Some specialists within the Finance Ministry oppose further subsidies, citing a lack of allocated funding. One official stated, "This is an expensive decision that is impossible to implement from the state budget's perspective. Furthermore, they propose cutting taxes right before the elections. I refuse to support this decision." Another source within the ministry described the proposed price reduction as a form of voter bribery and doubted the Ministry of Justice would approve it. Previously, the Ministry of Energy and Infrastructure confirmed a record increase in gasoline prices, with a liter of 95-octane gasoline costing 8.27 shekels after a 52 agorot increase.