Israel cuts gasoline prices by 50 agorot after Smotrich approves temporary excise relief

Israel will cut gasoline prices by 50 agorot per liter from midnight Sunday, after Finance Minister Bezalel Smotrich approved a temporary reduction in the excise tax. The self-service price of 95-octane gasoline will fall from NIS 8.25 to NIS 7.75 per liter.

The state will absorb the difference by giving up part of the tax it collects from drivers. The decision came less than a week after gasoline prices rose to a level matching Israel’s record, set in September 2012.

The increase reflected higher global gasoline prices and refining margins, the dollar-shekel exchange rate, the Consumer Price Index linkage of the excise tax, and updated marketing and full-service charges. Smotrich quickly instructed Finance Ministry officials to find a way to reduce the amount drivers paid at fuel stations.

The timing has drawn scrutiny. The order will remain in force until October 31, four days after Israel’s October 27 election. That means drivers will receive the discount throughout the campaign, while Smotrich can point to an immediate reduction in a major household expense. The Finance Ministry’s legal adviser and Attorney-General Gali Baharav-Miara approved the measure, citing a previous excise-tax reduction near an election during Avigdor Liberman’s tenure as finance minister.

Officials said the measure could also ease pressure on transportation, distribution and shipping costs, which can feed into prices for food, deliveries and services. Critics, however, have raised concerns that the reduction amounts to election economics. The move carries an irony: the state is temporarily giving up 50 agorot of the heavy tax it imposes on each liter to shield the public from a record-high fuel price.