Taxi Fares in Israel to Drop Nearly 11 Percent – Six Months Too Late

Political calculations caused transportation minister to delay signing off on order.

Eran Lanun

A full six months after an inter-ministerial committee approved the measure, Transportation Minister Yisrael Katz over the weekend signed off on a 10.9 percent cut in taxi fares.

The reduction will probably go into force at the beginning of October, but no final date has been released and the reduction still requires the approval of Finance Minister Moshe Kahlon. The base fare will then go down to 10.90 shekels ($2.89), down from the 12.30-shekel rate it has been for the past three years.

Under the formula used for setting price-controlled fares, the rate should have fallen as early as last March. Each month of delay cost riders 60 million shekels.

The cost of gasoline makes up 38% of the price basket used to fix fares, but even though the global price of oil has plummeted since the middle of 2014, the interministerial committee only took up the issue at the end of last year for the first time.

Before that, the base fare had been rising steadily – from 7.70 shekels in 2000, to 9.50 in 2006, 11.50 in 2008 and finally 12.30 in 2013.

Katz delayed signing the measure because of the political power of the taxi drivers, whose union leaders have formed a close network of connections to the central committee of his Likud party.

The ministry offered excuses over the last months, issuing statements that it was “preparing to issue the new price directive” and that the process was “in its final stages.” In the meantime, bus fares were adjusted several times.