Steinitz Cancels Fuel Tax Hike

Fuel taxes will not be rising on January 1, 2012 as originally scheduled. Finance Minister Yuval Steinitz signed new fuel tax regulations yesterday, canceling the scheduled increase already approved by the Knesset as part of the two-year 2011-2012 budget.

In cancelling the increase, Steinitz officially adopted the recommendation of the Trajtenberg committee on socioeconomic change. The treasury kept the issue open and on the agenda in an attempt to find ways to raise revenues next year in light of an expected tax shortfall. Treasury officials considered raising the tax by 15 agorot per liter of gasoline in recent days as tax revenues have fallen.

At the beginning of 2011, fuel taxes rose 20 agorot per liter and were scheduled to rise the same amount in 2012. The state changed its policy a number of times in the face of the social protests last summer, in an attempt to hold down the cost of living. But this does not mean Steinitz cannot change his mind during 2012 and raise fuel taxes once again, as the treasury has not given up on the idea in the long term. Taxes on a number of other products, such as cigarettes and alcohol, could also rise next year.

"This is one of the main steps to lower the cost of living in Israel," said Steinitz. "Other steps such as lowering customs duties and purchase taxes and lowering the price of food and consumer goods will be taken soon."