Fuel Prices to Drop in Israel Following Tax Reduction

The fuel price in Israel is expected to decrease to NIS 7.77 per liter for self-service 95-octane gasoline, following approval from the Attorney General. This reduction of NIS 0.50 per liter is a result of Finance Minister Bezalel Smotrich's initiative to offset a recent international price hike.

International factors, including a roughly 13% rise in global gasoline prices due to increased oil costs and concerns over energy market stability, coupled with a 3% strengthening of the dollar against the shekel, had driven up fuel costs in Israel. Without intervention, prices were projected to reach NIS 8.27 for self-service and NIS 8.53 for full service.

Smotrich, who had previously implemented a similar tax reduction, sought and received approval from Attorney General Gali Baharav-Miara to further lower the price by reducing excise taxes. This approval was necessary due to the ongoing election period. The Ministry of Energy awaits a signed order to implement the change, likely by Sunday night, making the new price effective early Monday.

While the price drop offers immediate relief to drivers, economists note it is largely a cosmetic measure. The reduction comes not from cheaper fuel but from the state foregoing tax revenue. This means the public still pays for the higher underlying cost, but the burden shifts to the state's finances, potentially increasing the deficit or requiring future tax increases. Each NIS 0.50 reduction in excise tax costs the state approximately NIS 150 million per month.