Will Gas Prices Drop: The Ministry of Finance's Emergency Move
After gas prices in Israel soared to an all-time historical high, the Ministry of Finance is attempting to approve an emergency measure to lower gasoline costs, but the Budget Department and the Tax Authority are strongly opposing the move.
Gas prices in Israel continue to burden households, after the price of a liter of 95-octane gasoline at self-service stations reached 8.25 shekels in September 2026, the highest price ever recorded in the country. Against the backdrop of the unusual price hike, the Ministry of Finance is promoting a move intended to temporarily provide relief to drivers.
The legal advisor of the Ministry of Finance, Adv. Dudi Kopel, appealed to the Deputy Attorney General with a request to approve a temporary reduction of the excise tax imposed on fuel. Under the proposal, the regulated price of gasoline for the consumer will be reduced by 50 agorot per liter, and the move is expected to last until October 31, 2026.
The decision comes after the price of gasoline rose significantly during the year. In January, the price stood at 6.85 shekels per liter, and it is now 1.40 shekels higher. The increase is attributed, among other things, to the war against Iran, the closure of the Strait of Hormuz, and the rise in natural gas prices in Europe.
According to estimates, the reduction of the excise tax is expected to cost the state treasury about 155 million shekels each month, and a total of about 310 million shekels by the end of the planned period. The funding is supposed to come from a budget surplus created following only partial implementation of the increase in the tax exemption for personal imports.
However, the move does not enjoy consensus within the Ministry of Finance. The Budget Department, the Tax Authority, and the Chief Economist oppose intervention in fuel prices and warn against increasing the deficit at a time when the state is dealing with heavy expenses due to the war. In addition, professional officials fear that a temporary reduction will lead to future pressure to carry out further reductions.
The legal aspect is also particularly complex. Israel is in an election period, and a transitional government is required to act with restraint regarding economic decisions that could be perceived as benefits to the public during a politically sensitive time.
Despite this, the legal advisor of the Ministry of Finance believes that there is justification to promote the move due to the sharp rise in the cost of living. Furthermore, he points out that the current proposal is more limited in its scope and duration compared to the excise tax reduction that was approved during the 2022 election period.
If the move is approved, drivers are expected to see a decrease of 50 agorot in the regulated price of gasoline, but as of now, it is still a proposal under legal and economic review.
