(photo credit: Marc Israel Sellem/The Jerusalem Post)
The Knesset Finance Committee on Monday instructed the Finance Ministry to
cancel the NIS 0.40 per liter hike in the fuel excise that was supposed to go
into effect at the beginning of 2012, bowing to public pressure over rising
RELATED:Knesset holds special session on rising fuel costsAdding fuel to the fire
However, the committee also canceled an income tax cut
that was part of the state budget for 2011-12, and which was supposed to bring
the basic tax rate down from 24 percent to 23%.
The first move followed
growing calls from interest groups and in the media for the government to cancel
the excise, as the price of self-service 95 octane gasoline blew out to NIS 7.62
with the most recent price hike on April 30.
Committee chairman Moshe
Gafni said Israel ranked low compared to other countries in direct taxes, but
collected much more than other in indirect taxes.
“From a pure economic
perspective there is logic in this, but from a social perspective it is a
disaster,” he said. “The Israeli economy is strong and stable enough, and
therefore there is space to change the policy slightly, so that citizens do not
suffer following the raising of indirect taxes on consumer products such as the
According to data sent to Gafni before the meeting by
Israeli Consumer Council CEO Ehud Peleg, consumers today pay around NIS 320
million more on fuel each month than in the past few years.