AG gives Smotrich go-ahead to slash fuel tax, leading to lower prices at pump

Attorney General Gali Baharav-Miara on Wednesday gave the green light to Finance Minister Bezalel Smotrich to cut an excise tax on gasoline, which will lead to lower prices at the pump for Israeli drivers.

The move came as gas prices hit a record NIS 8.25 per liter, equivalent to $10.49 per gallon. The price, set by the government, will now be NIS 7.75 per liter, equivalent to $9.70 per gallon.

Gas prices have spiked worldwide, including in Israel, due to the US war with Iran and Iran’s obstruction of the Strait of Hormuz.

Smotrich, who reportedly wants to institute the tax cut in the coming days, did not immediately respond to Baharav-Miara’s decision.

There was speculation that Baharav-Miara would nix the reduction of the excise tax because she would deem it a case of improper electioneering less than two months before Israel’s October 27 election, as she did in 2022 when then-finance minister Avigdor Liberman tried to lower gas prices ahead of that year’s election.

Reports also said Smotrich was facing opposition from experts at the Finance Ministry warning that the government doesn’t have the money to pay for the tax cut. According to Channel 12 news, dropping the price per liter to NIS 7.75 was expected to cost the government NIS 300 million (some $100 million) per month.

In Israel, where a government authority sets gas prices monthly, regular-grade 95 octane fuel has jumped from NIS 6.88 per liter in February 2026 (equivalent to $8.75 per gallon) to the recently announced rate of NIS 8.25 per liter in September, prompting Smotrich’s planned intervention. The rate of NIS 8.25 matches a record previously set exactly 14 years ago in September 2012, when, similarly, tensions between Iran and an Israeli government led by Prime Minister Benjamin Netanyahu helped prompt a jump in oil prices.