Petrol prices soar
Photo: Reuters

Netanyahu reduces petrol tax, for now

Hours before petrol prices were set to rise above eight shekels per liter, prime minister orders temporary tax reduction

Israel's petrol prices were set to reach an all-time high of NIS 8.05 ($2.12) starting March 1, but hours before the price hike went into effect Prime Minister Benjamin Netanyahu slightly reduced the tax on petrol.


The PM's decision means that one liter of gas will cost NIS 7.74 at self-service stations and NIS 7.95 at full service stations. However, Netanyahu's decision is valid for only a month.


Earlier, the Energy and Water Ministry confirmed that gas prices will rise by 5.09%. The move is said to stem from the steady rise in crude prices, following growing tensions with Iran and the EU's oil embargo on the Islamic Republic.


Despite the public outcry and political criticism, the Treasury is persistent in its refusal to cut the excise tax. Excise tax and VAT combined makes up 54% of the consumer's petrol prices.


As crude and petrol prices soar, aviation industry sources warned Wednesday that an additional increase in travel prices may be unavoidable.


Jet fuel prices make up 30% of air carriers' overhead and stand to spike form $32 billion in 2011 to $200 billion, an industry source said.


Harel Locker, director-general of the Prime Minister's Office, is said to be conducting marathonic discussions with Treasury officials in an attempt to mitigate the ruling.


לא מספיק חשוב. ראש הממשלה עוזב את הדיון על מחיר הדלק (צילום: גיל יוחנן )

Netanyahu exiting the gas vote (Photo: Gil Yohanan)


Chairman of the Knesset's Finance Committee MK Carmel Shama (Likud) is set to meet with Locker later on Wednesday.


The Treasury maintains that any cut to the excise tax will mandate imposing new taxes or possible cutbacks on education, health and social warfare.


Knesset members from both the Opposition and the Coalition demanded that Netanyahu personally intervene in order to lower the rising gas prices.


Kadima proposed two bills concerning the gas prices: The first bill by MK Yoel Hasson, proposed to limit Finance Minister Yuval Steinitz' ability to impose taxes that exceed 30% of gas prices, without the Knesset's Finance Committee's backing. The bill was rejected by a vote of 36 to 25.


The second bill, presented by MK Meir Sheetrit, proposes that the VAT applied to excise tax be canceled, which will help lower gas prices by NIS 0.50 per liter. The bill was rejected by a vote of 29 to 18.


Netanyahu left the plenum midway through the debate and did not participate in the votes.


"The government has to order various (tax) breaks ahead of future price increases," Energy and Water Minister Uzi Landau told Ynet.


Landau noted that the price hike was in response to the Iranian's EU-embargo counter-measures, adding that "We have to make sure that the consumers don't end up paying the price.


"(…) The government can't control the rise in crude prices, but it can control the taxes imposed on the citizens. I don't envy the one having to make such decisions," he said, referring to the prime minister.


Amir-Ben David, Itamar Eichner and Gad Lior contributed to this report



פרסום ראשון: 02.29.12, 10:59
 new comment
This will delete your current comment