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Israeli Finance Minister Moves to Cut Fuel Taxes Ahead of Planned Gas Price Rise
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Smotrich Announces Fuel Tax Cut to Avert Gas Price Surge
Finance Minister Bezalel Smotrich posted on X/Twitter that he will reduce fuel taxes to prevent an imminent increase in gasoline prices. He instructed Treasury officials to deepen subsidies so that the expected rise—an additional 52 agorot per litre that would have pushed the price to a record NIS 8.27 per litre—would be cancelled. The announcement was made on a Tuesday preceding the August 30, 2026 publication of the report.
Context: Rising Global Fuel Costs and Domestic Price Pressures
The proposed price hike would have coincided with a roughly 13 % increase in global fuel costs, driven by ongoing supply-chain disruptions and broader energy-market vulnerabilities. Israeli consumers were therefore facing the prospect of the highest gasoline price in the country’s recent history.
Details of the Tax Reduction and Treasury Response
On September 6, Smotrich signed an order to cut the gasoline price by 50 agorot per litre, offsetting the fiscal shortfall through a separate tax reduction. The move received legal approval from the prime minister’s legal adviser. However, senior officials within the Treasury described the tax cut as “unwise,” arguing that the fiscal impact could be problematic despite the short-term consumer benefit.
Expected Impact on Israeli Economy and Consumers
Analysts note that while the immediate effect is a modest price relief for drivers, the longer-term budgetary consequences remain uncertain, given the Treasury’s concerns about deficit management.
Next Steps and Fiscal Management
The Finance Ministry will monitor the fuel market and adjust the subsidy framework as needed. Managing the deficit through the accompanying tax reduction is intended to balance the short-term consumer relief with the government’s fiscal responsibilities.