Smotrich’s Fuel Tax Cut Ends November 3, Threatening NIS 9 Gasoline

Israeli drivers will face a potential surge in fuel costs as early as Saturday night. The temporary reduction in gasoline excise taxes, implemented by Finance Minister Bezalel Smotrich, expires on November 3. If the cut lapses and global oil prices remain elevated, the cost of 95-octane gasoline could exceed NIS 9 per liter. The current market price stands at NIS 7.77.

Smotrich introduced the initial tax cut last month to stabilize prices ahead of upcoming elections. An earlier administrative order, signed a month prior, had reduced the tax by half a shekel per liter. As crude oil prices climbed, the Finance Minister doubled the reduction to NIS 1 per liter. Under standard conditions, taxes account for over 60% of the retail price of gasoline in Israel. These levies generate approximately NIS 20 billion in state revenue annually.

The Finance Ministry’s Budget Department estimates that the tax reductions over the past two months will cost the state treasury roughly NIS 467 million. This expenditure coincides with record-high defense spending driven by the ongoing conflict. Following the elections, Smotrich must decide whether to extend the relief. If the current government is set to lose power, he may allow prices to spike, transferring the economic adjustment to his successors.

Market expectations for a third round of fighting involving Israel, Iran, and the United States have already lifted oil prices by about 10% compared to late September. That was the period when the Energy Ministry’s Fuel Administration set the current October gasoline price. Even if Smotrich extends the tax cut, analysts project gasoline prices will rise by approximately 30 agorot per liter. This adjustment would place the price just above NIS 8 per liter.

If the tax reduction expires on schedule, the combined effect of higher oil costs and the restored tax burden could push prices above the NIS 9 threshold. The Fuel Administration will set the final price toward the end of this week. The calculation relies on oil prices in the Mediterranean basin at that specific time. The new price may remain in effect for only a few days before the next scheduled adjustment.