Israel Cuts Fuel Tax Again Amid Election Season

The price of gasoline in Israel will decrease by 50 agorot per liter starting Sunday night, bringing the cost to 7.77 shekels. This reduction is the result of a decree signed by Minister of Finance Bezalel Smotrich to lower the fuel excise tax to 2.73 shekels per liter. The move was approved by Attorney General Gali Baharav-Miara, despite occurring during an election period.

This is the second consecutive tax cut initiated by Smotrich. In early September, he reduced the excise tax by 50 agorot. Without these two reductions, the price of gasoline would currently be approximately 8.77 shekels per liter. The current reduction will be in effect for one month, until the end of October.

The budgetary cost of these measures is significant. The previous reduction cost the state approximately 310 million shekels over two months, and the current cut is expected to add another 150 million shekels. Together, the two reductions represent an accumulated loss of revenue of about half a billion shekels.

Professional officials within the Ministry of Finance oppose the move, warning of damage to the state budget. They argue that the tax system is not the appropriate tool for addressing price increases, comparing it to past proposals to reduce VAT on apartments as a solution to rising housing costs.

Smotrich, however, justified the reduction as a measure to stimulate growth and maintain price stability. He cited a precedent set by former Finance Minister Avigdor Lieberman, who also reduced the excise tax to curb rising prices. The Attorney General did not prevent this latest move, citing that she did not prevent similar actions in the past, despite concerns about "election economics."