Will fuel prices drop? Treasury approves 50-agorot excise reduction

The legal advisor to the Ministry of Finance, Adv. Dudi Kopel, has appealed to the Deputy Attorney General, Adv. Avital Sompolinsky, requesting approval for a temporary reduction of the excise tax on fuel during the election period, despite opposition from professional departments within the ministry. According to the request, the proposed reduction will lower the price of gasoline for the consumer by 50 agorot per liter until October 31, 2026, in parallel with a similar amendment that will apply to imported gasoline.

The background for the proposal is the sharp rise in gasoline prices over the last eight months, primarily following the war with Iran, the closure of the Strait of Hormuz, and the rise in natural gas prices in Europe. The regulated price of gasoline, which stood at 6.85 shekels per liter in January, climbed gradually and reached 8.25 shekels per liter in September 2026, an all-time high. The reduction will apply only to gasoline, the price of which is regulated, and not to diesel or LPG, the prices of which are not regulated.

The cost of the measure to the state is estimated at approximately 155 million shekels per month, and a total of about 310 million shekels. The funding will come from a surplus created due to the partial implementation of the increase in the tax exemption on personal imports. The unified position of the Chief Economist's Division, the Tax Authority, and the Budget Department at the Ministry of Finance is that fuel prices should not be intervened in through the excise tax, partly because the measure will increase the deficit during a period of fiscal challenge resulting from the war, and could lead to demands for deepening the reduction later on.

The request is submitted against the backdrop of the election period that began on July 18, 2026, after the Knesset approved an amendment to the Party Financing Law and went on election recess. Under the guidance of the Attorney General, it was determined that the current government acts as a transitional government, obligated to exercise restraint in the exercise of its powers in matters that are not urgent or necessary.

"This is an urgent measure due to the high price level, and it is limited in scope and time compared to the excise reduction carried out during the 2022 election period," Adv. Kopel argues in his appeal.

However, the appeal also notes the concern that the measure might be seen as motivated by political considerations ahead of the elections, and that professional staff work on the subject began only within the election period itself. Despite this, Adv. Kopel's position is that the legal difficulties do not amount to a prevention, and that it is possible to advance the amending order and the accompanying customs order at this time.