Minister of Finance Avigdor Liberman has announced that excise tax on fuel will be cut with immediate effect, so that a liter of gasoline and diesel will be NIS 0.50 cheaper. The cut comes after fuel prices have risen to an eight year high due to the Russia-Ukraine war.
Last Friday, the maximum price of government price controlled 95 octane gasoline at self-service pumps in Israel rose by NIS 0.39 to NIS 7.44 per liter. The Israeli government can afford to make the cut because of the dynamic state of the economy with high growth, low unemployment and a fast narrowing deficit.
At a virtual press conference called to sum up the Israeli economy at the end of the first quarter of 2022, Liberman said that the cut will be implemented for the next three months after which matters will be re-assessed according to developments in the Israeli economy and the global economy.
Liberman has made u-turn on this issue, having previously insisted that cutting fuel excise would encourage use of cars. Last week Bank of Israel Governor Prof. Amir Yaron called on the government to shift away from excise towards a congestion tax to discourage people from using cars in Israel's biggest cities. Members of the government coalition have been pressing Liberman to cut excise on fuel and moderate the rise of electricity prices due to the rise in the cost of living.
Liberman said, "Every quarter we conduct an assessment of the economy's performance and make decisions accordingly. Next quarter we will also make more decisions. 'Bloomberg' expects oil prices to stabilize around $105 per barrel. It could fall to $99 or rise to $112 - these are the marketing ranges. As we are now in a good position, we are giving money back to the public. If an opportunity exists to benefit the public and it's possible to give money back to the public, then it should be done. At the moment it's possible to give back NIS 0.50 from excise tax on both a liter of gasoline and a liter of diesel. The price of gasoline will be NIS 6.90 per liter and diesel will go down accordingly."
Liberman also revealed that Israel's fiscal deficit had narowed to 1.6% of GDP in the 12 months ending March 31, 2022 from 2.2% the previous month.
Published by Globes, Israel business news - en.globes.co.il - on April 5, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.