Israel Freezes Gas Tax Rates for One Month

In response to the protests over the last two weeks, the government has decided to delay the 30 Agora tax hike on gasoline by a month.

On Sunday, a meeting was held between Prime Minister Benjamin Netanyahu, Finance Minister Yuval Steinitz, National Infrastructure Minister Uzi Landau and Foreign Minister Avigdor Lieberman over the growing unrest amongst the Israeli public.  During the meeting, the prices were discussed as was the July hike in the price of crude oil because of Egyptian terrorist cells constantly sabotaging the gas line from the Sinai to Israel as well as reports that Egypt had been charging Israel triple for gasoline in comparison to other countries.  Consequently, the decision was reached to not raise the price as planned, although the exact percentage was not discussed and left to the Ministry of Infrastructure. Currently, the gas prices is about NIS 6.90 for 95 octane fuel and was set to reach 7.53, the highest price in history.

Upon the meeting’s conclusion, Steinitz and Landau notified gas suppliers that they would be required to reduce the on 95 octane gasoline by 22 Agorot at self-service stations and 15 Agorot at full-service stations.  Major fuel suppliers, specifically Delek and Paz, warned that the tax reduction would hurt their profit margins.  Consequently, Paz and Delek shares dropped over the last few days. The Ministry of Infrastructure is set to re-evaluate the prices and tax rates during the coming month in order to decide if it is necessary to impose price controls on the companies.

Those who have been protesting against the current gas pricing scheme and taxes for the last few years were also not happy with the outcome.  According to Zev Grauer, one of the leaders of the protests, the discount is essentially a mockery of the public since it is only occurring because of the social unrest in the country.  He said “They need to understand that the struggle is not for several agorot to cover the impending rise, it’s about the 60% regular tax rate.”

The price cut is valid until September 1, when the government will discuss the matter again.