Gasoline prices are slated to go up this week – the price for a liter of 95 octane fuel to reach approximately NIS 7.10 (about $1.98). The final price is slated to be set during the week.
Gasoline prices in Israel are among the highest in the world, and one of the reasons is the high taxes on fuel.
Out of every New Israeli Shekel we pay the petrol companies in gas station, some 56 agorot go directly to the State as a result of VAT payments and excise tax, which is the fixed tax imposed on fuel products.
The increase of excise tax on gasoline and petrol by 20 agorot per liter, which will take effect at the end of the week, is expected to yield some NIS 1.1 billion (about $310 million) in taxes per annum, and double next year when taxes are raised once again.
The Knesset's Finance Committee on Monday is slated to approve the excise tax increase as part of the governmnet's Arrangements Act.
This is the second time in the past 18 months that the state has raised the excise tax, while publicly proclaiming that the aim is to boost tax revenues. Another tax increase of 20 agorot is slated for the beginning of 2012.
The Finance Ministry stated that environmental considerations were part of the reason behind the decision to bump up prices. As such, raising the prices is aimed at encouraging people to use their cars less.
The excise tax on carbon was also raised in an effort to limit electricity companies' use of the polluting substance.
This may lead to a hike in electricity prices, but will probably be set off by the lower cost of natural gas.
The tax on petroleum varies from country to country. In 2008 the average petrol tax in OECD countries was approximately 55% of the price of gasoline, similarly to Israel.
Countries such as Germany, Finland, France, Britain and Holland pay petrol taxes of up to 68% of the price. In comparison, the excise tax in the United States is set on only 15% of the price.
Venezuela, one the other hand, has one of the lowest petrol taxes, due to its unlimited quantity of nationalized oil.
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