Full Breakdown
Israeli Government Cuts Gasoline Excise Tax to Lower Prices
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Core Action: Tax Cut Lowers Pump Prices
Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich approved an order that reduces the gasoline excise tax by 0.50 shekel per liter. The reduction takes effect at midnight on a Sunday, bringing the maximum price of 95-octane gasoline from NIS 8.27 to NIS 7.77 per liter. The move is described as a temporary measure that shifts part of the tax burden from drivers to the state.
Background: Global Fuel Surge and Domestic Record Prices
In September 2026, Israeli gasoline prices rose by 52 agorot, reaching an all-time high of NIS 8.27 per liter (about $10.17 per gallon). The Energy Ministry linked the jump to a 13 % global increase in fuel costs and to oil trading above the $100-per-barrel benchmark, citing instability in world energy markets. A similar record was set in September 2012 during heightened regional tensions.
Financial Impact: State Revenue Losses
Finance Ministry officials warned that the tax cut will reduce state revenue by roughly NIS 150 million for the month in which it is applied. Earlier in September, a comparable 0.50 shekel reduction was projected to cost the treasury NIS 310 million, while a separate subsidy announced by the Ministry of Finance was said to have already cost NIS 268 million in lost tax revenue. These figures illustrate the fiscal trade-off of the price-lowering policy.
Official Statements & Responses
A Government Press Office release emphasized that the government is preventing “soaring” fuel prices in Israel while maintaining low electricity costs through natural-gas development and competition. Finance Minister Smotrich posted on his official X account that the excise-tax cut is intended to keep domestic fuel prices reasonable amid worldwide price hikes. Prime Minister Netanyahu echoed the sentiment, stating that Israel’s economy “is breaking records” and that the government will continue to steer it responsibly. The Finance Ministry’s legal adviser confirmed that no legal obstacle prevents Smotrich from issuing the order, pending approval from Attorney General Gali Baharav-Miara, who had previously ruled the move valid.