Fuel Tax Expiry: Israeli Gasoline Faces NIS 9 Spike

The price of 95-octane gasoline in Israel may exceed nine shekels per liter as early as next week. This potential jump follows the expiration of a temporary excise tax reduction on November 3. The current pump price stands at 7.77 shekels per liter.

Finance Minister Bezalel Smotrich implemented the tax relief last month to stabilize costs ahead of the upcoming elections. The measure builds on an earlier order that halved the tax rate by 0.50 shekels per liter. As global oil prices climbed, Smotrich doubled the reduction to 1.00 shekels per liter to offset the increase.

Taxes typically account for more than 60% of the total cost of gasoline in Israel. The Finance Ministry’s Budget Department estimates that the reductions over the past two months will cost the state approximately 467 million shekels. This revenue loss occurs while the country’s defense spending reaches record levels due to the ongoing war.

Global oil prices have risen by about 10% compared to late September. This increase follows expectations of a third round of conflict involving Israel, Iran, and the United States. The Energy Ministry’s Fuel Administration set the October price before this recent surge in oil costs.

Smotrich must decide whether to extend the tax relief after the elections. If the current government is set to leave office, the minister may allow prices to rise, leaving the next administration to manage the economic impact. The first price adjustment is expected to take effect on Saturday night.

Analysts project that even if the tax cut remains in place, gasoline prices will rise by about 30 agorot per liter. This would bring the cost to just over eight shekels. If the tax reduction lapses, the price could climb above nine shekels per liter.

The final price will be determined based on oil prices in the Mediterranean basin at the end of this week. The new price may remain in effect for only a few days before the next adjustment cycle.