Just hours before the prices of gasoline were supposed to go up to eight shekels a liter (or $8 a gallon), Prime Minister Binyamin Netanyahu decided on Wednesday to lower the tax on gasoline by 0.10 shekels.
The price of a liter of gasoline thus rose to 7.74 shekels for self service as of midnight on Wednesday. The price for full service will be 7.95 shekels, a price which is still considered relatively high by the Israeli public.
Netanyahu’s office said in a statement that in the next two months, the Finance Ministry will formulate proposals in order to find sources of financing to deal with the price of fuel.
Netanyahu was quoted in the statement as having said, “While the state has no control over the price of petroleum in the world, we do not have to tax every price increase.”
The worldwide surge in the price of crude oil is the main factor behind the increase in the price at the pump. However, another factor is stiff excise taxes, which rise proportionately with the higher prices for gasoline.
The government is enjoying a monthly surplus, but Finance Ministry director Doron Cohen said earlier this week that it already has forfeited $700 million dollars in fuel taxes by agreeing to cancel planned hikes in excise taxes.
Earlier on Wednesday, the Knesset voted to reject two laws proposed by Kadima party MKs that would have limited the amount of tax the government can levy on the purchase of gasoline.