Israel Gasoline Prices Nearing 9 Shekels as Tax Break Expires
Translated & summarized from Vesty by baba
Israel's gasoline prices are projected to reach nearly 9 shekels per liter as a fuel tax reduction expires on October 31st. The potential 1 shekel per liter increase, coupled with a strengthening dollar, could push prices to a historic high. This price hike is expected to contribute to a half-percent rise in inflation in November. The Finance Minister has not yet decided whether to extend the tax relief measure.
The story in 5 lines · by baba
- Gasoline prices in Israel may reach 9 shekels per liter as a tax reduction expires October 31.
- The expiration of the tax break could increase gasoline prices by 1 shekel per liter.
- Economists forecast the price hike could boost Israeli inflation by 0.5% in November.
- Global oil prices have risen to $110 per barrel, contributing to the situation.
- The Finance Minister has not yet decided on extending the tax relief measure.
The period of fuel tax reduction in Israel is set to end on Saturday night, October 31st. If the measure is not extended, the price of 95-octane gasoline is expected to jump by 1 shekel per liter, approaching 9 shekels. This increase is anticipated to fuel inflation.
Global oil prices have risen to $110 per barrel amid ongoing crises in the Strait of Hormuz. This prompted the Ministry of Finance to implement two half-shekel excise tax reductions in September and early October, totaling a 1 shekel decrease. The cost of these fuel tax breaks is nearing half a billion shekels, with an extension through November potentially costing the state an additional 300 million shekels, bringing the total to 800 million.
Calculations suggest that the immediate cancellation of the tax relief would raise the price of gasoline from its current 7.77 shekels per liter to 8.77 shekels. An additional 10-20 agorot per liter could be added due to the strengthening dollar against the shekel, with the current official exchange rate at 3.11 shekels to the dollar.
Dr. Amit Mor, CEO of Eco Energy, stated that the price could reach 9 shekels per liter for the first time. He noted that if fuel costs on the markets rise further next week and the dollar does not weaken, the price will approach this record, impacting the entire economy. Economists predict that such a fuel price hike could increase inflation in Israel by about half a percent in November, alongside rising prices for many goods and services.
Ministry of Finance representatives indicated late last week that the Finance Minister had not yet decided on extending the tax discount. The historical peak price for 95-octane gasoline was 8.25 shekels per liter in September 2012. At that time, Prime Minister Benjamin Netanyahu first proposed a fuel excise tax reduction. The tax discount was later canceled, but in the summer of 2022, then-Finance Minister Avigdor Lieberman reinstated it when prices exceeded 8 shekels. Current Finance Minister Bezalel Smotrich subsequently canceled this discount.
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