Government freezes price of gasoline for one month

Move comes after Steinitz bows to pressure; Uzi Landau: "It is impossible to impose taxes on the public beyond what they can endure."

By NADAV SHEMER
August 1, 2011 01:15
2 minute read.
The Jerusalem Post

Landau. (photo credit: Ahikam Seri/Bloomberg)

The government will absorb the higher cost of gasoline in August, after Finance Minister Yuval Steinitz bowed to pressure from National Infrastructures Minister Uzi Landau on Sunday and signed a directive cutting the excise tax by an amount equal to the price rise.

The price of self-service 95 octane gasoline was due to rise at midnight by NIS 0.31 per liter to NIS 7.53, just short of the record of NIS 7.62 set in May. Instead, it will remain at NIS 7.22, effective until the end of August.

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It was also agreed that an interministerial committee on prices will examine whether to cut the marketing margin on gasoline. The Finance Ministry said in a statement that the decision to freeze gasoline prices was based on the assumption that the committee would agree to cut the margin by around 20 agorot at the beginning of September.

Landau said at the start of the weekly cabinet meeting Sunday that taxes accounted for more than 50 percent of the price of gasoline paid by the consumer, and that the only way to maintain a reasonable price would be to lower the excise and value-added taxes.

“I turned to the prime minister on this issue several months ago,” he said. “The murmurings from the public are real. It is impossible to impose taxes on the public beyond what they can endure. We must announce immediately that the government will absorb the costs, at least for the next few months.”

Landau added, “The marketing margin is small compared to the other components, so we place all the pressure just on that. However, we are also working on this area. The committee I established will reach its conclusions very soon, and I hope we can also do our part to make things easier for the public.”

The price of fuel at gas stations is determined by five components: the cost of oil, the fuel excise, the marketing margins, 16% VAT tax on the three aforementioned components, and an added flat fee for full service that currently stands at NIS 0.13. The excise accounts for more than 40% of the retail price, and is the largest component.


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