If you thought apartment prices in Israel have gone up tremendously over the past few years years, it turns out that motor fuel prices have increased even more. A Yedioth Ahronoth inquiry reveals that in the past five years, 95-octane gasoline prices have soared by 65%, while apartment prices went up by "only" 57%.
The most recent price hike of NIS 0.25 ($0.07) per liter was just another small blow to Israelis' travel expenses compared to the price hikes they have suffered in recent years.
In January 2009, a liter of the popular 95-octane gasoline for self service cost NIS 4.75 ($1.32), a price which sounds imaginary right now. The Central Bureau of Statistics' apartment price index stood at 204.6 points at the time.
According to ECA International, Israeli metropolis fell from 32nd most expensive place in the world to 45th place since last year, but still ranks as priciest place in Middle East
Today, a liter of self-service 95-octane gasoline costs NIS 7.85, and the CBS' recent apartment price index (published in June) stands at 321.7 points. In fact, fuel prices have gone up faster than apartment prices in recent years.
The rise in gasoline prices in the past five years costs every Israeli family an additional NIS 3,300 ($915) a year. following the recent price hike, Israeli drivers will spend an average of NIS 880 ($244) a month for motor fuel.
This price hike stems first and foremost from the rise in oil prices. In January 2009, Brent cost $40 per barrel. Today it costs $100. The increase in oil prices is compensated by the decline in the US dollar's exchange rate, which helps to slightly moderate the prices.
But oil producers have another partner in the profits which are soaring at our expense – the Finance Ministry. As taxes make up most of the price of a liter of gasoline, the more expensive the fuel – the more tax enters the state coffer.
54% per liter paid as taxFuel taxation is comprised of two taxes: Excise tax, a fixed sum of the price per liter, and value added tax. In January 2009, the excise tax was NIS 2.62 ($0.73) per liter. Today it stands at NIS 3.05 ($0.85), in addition to the increase in taxes collected on the backdrop of the rise in the fuel price itself.
And so 54% of every liter of gasoline is paid by Israeli drivers as tax. This is an extremely high tax burden compared to the world. Drivers in Britain are the only ones who pay more, 57.7%, yet they have the option of using a developed public transportation system.
In Germany, only 47.4% of gasoline price is paid as tax, in Spain 44.4%, in South Korea 38.8%, and in Japan 31.6%. In Chile the tax is less than 24%, in Mexico only 14.1%, and in New Zealand just 13%.
The State's income from fuel taxation have grown accordingly from NIS 12.7 billion ($3.52 billion) in 2009 to NIS 17.5 billion ($4.85 billion) in 2012. Some NIS 9.275 billion ($2.57) already entered the state coffers from fuel taxation this year, from January to July.
Instead of lowering the tax rate to prevent it from leading to a further increase in fuel prices beyond the rise in oil prices, the Finance Ministry is more than happy to join in on the celebration.
Treasury officials explain in the State Revenue Administration's report that "the use of fuel products leads to negative external effects, like air pollution, road accidents and traffic. The excise tax imposed on fuel products is aimed, among other things, at expressing these external expenses."