Infrastructures Minister: Treasury the real tycoon

Uzi Landau: The real tycoon is the party that levies a NIS 150 tax on the public for a NIS 300 tank of gas.

The real tycoon in Israel is the Ministry of Finance, Minister of National Infrastructures Uzi Landau told “IDF Radio" (Galei Zahal) today. He said that the Ministry of Finance collects NIS 150 in taxes on every NIS 300 fill-up of a car, whereas the reduction in fuel companies' marketing margin lowers the cost of the fill-up by just NIS 7. He called on the Ministry of Finance to lower the excise by the same amount as the reduction in the marketing margin.

Last night, the government raised the price of self-service 95 octane gasoline by NIS 0.05 per liter to NIS 7.27 and raised the price of full-service gasoline by NIS 0.12 per liter to NIS 7.47.

The price hike came after Landau capitulated to pressure from Prime Minister Benjamin Netanyahu and Minister of Finance Yuval Steinitz and signed a directive cutting the fuel companies' marketing margin by NIS 0.19 per liter of gasoline. At the same time, Steinitz raised the excise on gasoline by NIS 0.25 per liter, resulting in a net price hike. The drop in the average quotes of CIF La Vera trade prices for fuels in the Mediterranean basin during August resulted in a NIS 0.01 drop in the price of gasoline per liter.

The CIF La Vera trade prices for oil accounts for 38% of the retail price of gasoline in Israel; the excise accounts for 39%, VAT accounts for 14%, and the fuel companies' marketing margin accounts for 8%.

Landau opposed an immediate NIS 0.19 per liter cut in the marketing margin recommended by the joint Ministry of Finance and Ministry of National Infrastructures price committee. He wanted the reduction to be made in two steps, but withdrew his objections and signed the directive last night, raising the price of gasoline.

Today, Landau said that "some parties at the Ministry of Finance" tried to portray his objections to cutting the marketing margin as "helping the tycoons". He said, "We said two things. One, the real tycoon is the party that levies a NIS 150 tax on the public for a NIS 300 tank of gas. The second is that when you look at the fuel companies' marketing margins in this case, the operating profit margin is 4%. There are no tycoons there."

The Ministry of Finance said that expert studies recommended reducing the marketing margin by at least NIS 0.19 per liter. Steinitz claimed that Landau had no moral right to reduce the reduction because that would require the public and businesses to pay more to the fuel companies.

Delek Israel Fuel Corporation Ltd. (TASE: DLKIS), Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL), and Sonol Israel Ltd. today petitioned the High Court of Justice against the Steinitz and Landaus' directive reducing the marketing margin. Paz Oil Company Ltd. (TASE:PZOL), the largest fuel company, will probably file a petition on Sunday.

The company's claim that there are material flaws in the approval process of the reduction, and that it is unreasonable, relies on incorrect data, and harms the companies disproportionately. Sonol raised the most original argument - it contends that the directive is invalid because it was not published in Arabic in the newspapers as required by law, but only in two Hebrew language dailies.

Published by Globes [online], Israel business news - - on September 1, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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