MK: Lower Gasoline Price by Capping Tax

The legislation is an effort to head off disproportionate taxation of gasoline by the Finance Ministry.

Tax on gasoline will not exceed 30%, without the explicit approval of the Knesset Finance Committee if a law proposed by MK Yoel Hasson (Kadima ) becomes law.

His legislation is an effort to head off disproportionate taxation of gasoline by the Finance Ministry, Hasson said. The limitation would take into consideration the combined rate of taxation from the value added tax and excise taxes on gas. If it were imposed today, Hasson said the price of gasoline would be NIS 6.78 per liter instead of NIS 7.62.

Hasson says consumers, both those who drive their own cars and those using public transportation, are suffering as a result of the recent sharp increases in the price of gasoline. He noted that the price for a barrel of crude oil is currently over the $100 mark as a result of unrest in the Arab world, notably in Libya, which is an oil producer. In the past, however, prices exceeded $100 a barrel without any connection to the current instability in the Middle East, but Israeli consumers still paid much less at the pump. The reason for this is indeed an increase in taxes on gasoline.

In January 2008, oil was selling at $100, or NIS 388 at the then exchange rates, while a liter of 95 octane gasoline was selling here for NIS 6.23. Today oil costs $105 or NIS 358 a barrel, purchased with today's stronger shekel, or 7% less than the January 2008 price.

The Israeli consumer, however, is now paying NIS 7.62 for a liter of gasoline rather than the NIS 6.23 per liter then. And while in July of 2008, the price of a barrel of oil in shekel terms shot up to NIS 496, consumers here were paying NIS 7.00 for a liter of gasoline - still less than they are paying now.

In January 2008, taxes represented NIS 3.13 of the price the Israeli consumer paid for a liter of gas, while today that figure is NIS 3.97, or 27% more than previously, Hasson notes.