Israeli Transport Companies Demand Diesel Tax Cut Amid Soaring Fuel Costs
Translated & summarized from NEWSru Israel by baba
Israeli transportation companies are demanding an immediate reduction in the excise tax on diesel fuel, warning that soaring costs threaten services for students, soldiers, and workers. The Transportation Companies Association sent a letter to Finance Minister Bezalel Smotrich after the government only lowered gasoline taxes. Fuel costs have risen 29% for carriers, impacting their profitability, especially in school transport with fixed contracts. The association seeks tax relief or restored refunds and future price indexing for diesel.
The story in 6 lines · by baba
- Israeli transport firms demand diesel tax cut due to 29% price hike since 2025.
- Association warns rising fuel costs threaten services for students, soldiers, and workers.
- Government recently lowered gasoline excise tax but not diesel excise tax.
- Fuel costs now represent 40% of companies' operational expenses.
- School transport companies face losses due to fixed, non-indexed contracts.
- Firms seek tax reduction, restored bus refunds, and diesel price indexing in contracts.
The Transportation Companies Association, representing over 500 private firms with approximately 22,000 vehicles and 25,000 employees, has urged the Israeli government to immediately reduce the excise tax on diesel fuel. In a letter sent this week to Finance Minister Bezalel Smotrich, Association Chairman Nisim Sarusi and CEO Dudi Gil warned that rising fuel prices have eliminated industry profits and threaten the transportation of schoolchildren, soldiers, and workers nationwide.
The appeal follows the government's decision to lower the excise tax only on gasoline, while diesel prices remained unchanged. Gasoline prices increased by 52 agorot per liter on October 1, and the government announced a 50 agorot reduction effective October 5, funded by a decreased excise tax. Diesel fuel prices, however, stayed the same.
According to data cited in the letter, the ex-refinery price of diesel in September 2026 was 3.26 shekels per liter, a 59% increase from the 2025 average of 2.05 shekels. This price had reached 3.66 shekels in April. With an additional 3.37 shekel excise tax per liter, and the cancellation of diesel tax refunds for buses in January 2026, the actual cost for carriers (excluding VAT) rose from an average of 5.15 shekels per liter in 2025 to 6.63 shekels in September 2026, a 29% jump.
The association highlighted that fuel constitutes about 40% of operational expenses, meaning the diesel price hike alone increased overall industry costs by 11.5%. The situation is particularly dire for school transportation services, where fixed-price, multi-year tender agreements without price indexing force some companies to operate at a loss.
The association is demanding either a reduction in the diesel excise tax to the same preferential level as gasoline or the reinstatement of diesel tax refunds for buses. They also seek a mandate for the Ministry of Education to include diesel price indexing in school transportation tenders and contracts starting from the 2027/28 academic year, along with a one-time adjustment of current contracts to reflect fuel price increases since April 2026.
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