Gasoline Prices in Israel May Spike Above NIS 9 as Tax Cut Expires
Finance Minister Bezalel Smotrich’s temporary tax relief ends November 3, potentially adding to a 10% rise in global oil costs.
By William Foster ·
Israeli drivers face a potential price jump that could push the cost of 95-octane gasoline past NIS 9 per liter. The current price stands at NIS 7.77. A temporary reduction in excise tax, enacted by Finance Minister Bezalel Smotrich, is scheduled to expire on November 3. This expiration coincides with rising global oil prices that have already increased costs by approximately 10% since late September.
Smotrich implemented the initial tax cut last month to prevent a sharp price increase ahead of the national elections. An earlier administrative order had reduced the tax by NIS 0.50 per liter. As oil markets fluctuated, the finance minister doubled that reduction to NIS 1.00 per liter. The Finance Ministry’s Budget Department estimates that these two months of tax relief will cost the state approximately NIS 467 million in lost revenue.
Under standard conditions, taxes account for more than 60% of the final price of gasoline in Israel. This structure generates roughly NIS 20 billion in annual state revenue. The recent tax cuts have reduced that income during a period when defense spending has reached record levels due to the ongoing war.
The next price adjustment is expected to take effect as early as Saturday night. The Energy Ministry’s Fuel Administration sets prices based on oil prices in the Mediterranean basin. The final figure will be determined toward the end of the current week. Expectations of a third round of fighting involving Israel, Iran, and the United States have contributed to the recent 10% rise in oil prices compared to levels in late September.
If Smotrich allows the tax cut to lapse, the price of 95-octane gasoline could climb above NIS 9. If the relief measure remains in place, analysts expect the price to rise by approximately 30 agorot per liter. That increase would bring the cost to just over NIS 8. The new price may remain in effect for only a few days before the next scheduled adjustment.
Smotrich must decide whether to extend the relief after the elections. If it becomes clear that the current government will not remain in office, he may allow prices to surge, leaving the economic consequences for the next administration to manage. The timing of the decision will determine whether consumers absorb the full cost of the tax expiration immediately or experience a phased increase.
Source: The Jerusalem Post
