Finance Minister Smotrich Seeks New Fuel Tax Cut Amid Price Surge

Israeli Finance Minister Bezalel Smotrich is planning another reduction in fuel excise taxes to counter a projected rise in gasoline prices. The Ministry of Energy and Infrastructure announced that the price of a liter of 95-octane gasoline will reach 8.27 shekels, including VAT, starting midnight Wednesday-Thursday. This represents an increase of 52 agorot from the current price of 7.75 shekels.

Smotrich met with senior Finance Ministry officials on Tuesday to discuss the potential new tax cut. This move faces professional opposition within the ministry, similar to a previous tax reduction implemented in September. The new price, effective October 1, 2026, already incorporates a 50-agora per liter tax reduction that is set to last until the end of October 2026.

The Energy Ministry attributed the upcoming price hike to a roughly 13% increase in global gasoline prices, driven by rising oil costs and concerns over crude supply and global energy market stability. A nearly 3% rise in the dollar's exchange rate also contributed to higher fuel costs.

The new price surpasses the previous record of 8.25 shekels per liter set in early September. At that time, Smotrich issued a temporary order reducing the fuel tax by 50 agorot, which lowered the price from 8.25 to 7.75 shekels. That reduction, initially set to expire at the end of October, was reportedly made despite professional objections and concerns it was politically motivated due to its timing before an election.

The government's legal advisor approved the September tax cut despite internal opposition. Smotrich is now exploring an additional reduction to mitigate the impact of global price increases on the domestic market. His office stated the cut is "correct at this time to drive growth in the Israeli economy," though professional staff in the ministry maintain their opposition.