Israel Considers Fuel Tax Hike as Subsidy Nears End
Translated & summarized from Cursorinfo by baba
Israeli drivers may face significantly higher gasoline prices starting November 5, as a temporary tax reduction is set to expire. Finance Minister Bezalel Smotrich is considering options to either fully or partially extend the tax break, which costs the state hundreds of millions of shekels. Without intervention, a liter of fuel could rise to nearly nine shekels, influenced by global oil prices and the dollar exchange rate. A final decision on extending the subsidy is expected soon.
The story in 6 lines · by baba
- Gasoline prices in Israel could rise sharply to nearly 9 shekels per liter by November 5.
- The potential price hike follows the expiration of a temporary tax reduction on fuel.
- Finance Minister Bezalel Smotrich is reviewing options to extend or partially maintain the tax break.
- Extending the full tax break would cost the state an estimated 300 million shekels per shekel of reduction.
- A compromise could involve a partial reduction of the excise tax, costing around 150 million shekels.
- Global oil prices and the dollar exchange rate are also factors influencing the final fuel cost.
Israel's Finance Minister Bezalel Smotrich has ordered a review of options that will determine the price of gasoline in the coming days, with drivers facing a potential sharp increase in early November. Following the expiration of a temporary tax break, the cost of a liter of fuel could approach nine shekels.
The Ministry of Finance is attempting to avert a price surge, but maintaining current rates would necessitate significant budgetary expenditures. On Wednesday, October 28, Smotrich met with senior ministry officials to discuss extending the reduced fuel excise tax beyond the upcoming Knesset elections. The current tax reduction is valid until November 4. If no new government decision is made, drivers could see a substantial rise in refueling costs starting November 5.
Preliminary calculations suggest that without the tax break, a liter of gasoline could increase to at least 8.77 shekels. The final price, however, will also depend on global oil market conditions and currency exchange rates. Rising oil prices are adding pressure, and the dollar exchange rate stood at approximately 3.10 shekels on October 28, further impacting the assessment. Under unfavorable conditions, the price could reach 8.90 shekels per liter, nearing the psychologically significant nine-shekel mark.
The ministry is exploring several solutions. One option is a full extension of the current tax relief, which would prevent a sharp price increase but cost the state an estimated 300 million shekels for each shekel of reduction. A compromise scenario involves a partial extension, possibly reducing the excise tax by 50 agorot instead of a full shekel, at an estimated budget cost of 150 million shekels. This would soften the price hike but might not maintain the current pump price.
State spending on fuel price support has already reached nearly 500 million shekels since the tax relief began. Further extension would increase this sum, requiring the ministry to identify funding sources. Smotrich has tasked specialists with analyzing projected price dynamics, global market changes, and budget capabilities to inform a decision on full or partial extension of the tax relief. The final decision remains pending, with current subsidized prices set to continue until November 4.
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