Gasoline prices gas tax 311.
(photo credit: Marc Israel Sellem)
The maximum price of full-service 95 octane gasoline will hit a record NIS 8.05 Thursday, after the government rejected a last-minute bid to remove the 16 percent value added tax component.
The Energy and Water Resources Ministry ordered the 38 agorot increase Wednesday because of the shekel’s depreciation against the dollar and a spike in global oil prices amid Iran tensions. It determines the maximum price according to five components: the cost of oil; an excise tax (currently NIS 2.96); marketing margins; VAT on the first three components; plus an added full service fee (currently NIS 0.21).
Prime Minister Binyamin Netyanyahu instructed his director-general Harel Locker Wedneday morning to find ways to prevent the price hike. But later that same day, government MKs helped defeat a proposal by MK Meir Sheetrit (Kadima) to remove the VAT component from the price of gasoline.
“The government is not prepared to listen to the public,” Sheetrit said during the Knesset’s debate on his bill. “A gasoline price increase will cause a general price increase, and the lower classes will be the first hit. What the Treasury does not understand is that a fuel crisis will expose the state to inflation, which will cost the economy hundreds of millions of shekels and lead to economic crisis.”
Earlier in the day, Energy and Water Resources Minister Uzi Landau told Army Radio that the price of gasoline was “excessive.” Pointing out that taxes account for more than 50% of the price, he urged his government counterparts to absorb the price increase.
“When global oil prices rise, so too does the cost to the consumer,” Landau said. “But it is important to remember that for many Israeli a car is not a luxury item, but rather a work tool for all intents and purposes.”
Opposition Leader Tzipi Livni called the price increase “a pointless scandal,” and called on Netanyahu to reduce gasoline taxes immediately. “The time has come for this government’s priorities to change. The time has come for it to put the general good of the public first,” she said.
Labor leader Shelly Yacimovich also urged the prime minister to halt the increase, saying : “Netanyahu knows that well that half of the price of gasoline is not derived from global competition and is simply indirect taxation.”
Finance Ministry acting director-general Doron Cohen on Tuesday ruled out lowering the gasoline excise or value added tax, saying that both had already decreased proportionally to the state budget over the past few years.
Speaking at a conference in Tel Aviv, Cohen said the Treasury could not give up on much-needed taxation revenues. It would be unacceptable to cut the budgets of other government departments in order to reduce the price of gasoline, he added.