Governor BoI: replace excise tax on fuel with congestion tax

As fuel prices skyrocket at gas stations, Bank of Israel Governor Prof. Amir Yaron has urged Israel to replace excise taxes on gasoline and other fuels with a congestion tax. On Thursday at midnight, April 1, the maximum price of government-controlled 95-octane gasoline at self-service pumps in Israel will rise by NIS 0.39 to NIS 7.44 per liter, the highest price since 2014 due to the war between Russia and Israel. Ukraine. and sanctions against Russia.

Fuel excise duties provided the government with NIS 21.5 billion in revenue in 2021, and as a result, Finance Minister Avigdor Liberman is reluctant to cut the tax.

Prof. dr. Yaron made his case for the shift to a congestion tax at yesterday’s presentation ceremony for the Bank of Israel’s 2021 annual report. He told Army Radio (Galei Tzahal) that in the long term, Israel needs to switch from excise to congestion compensation, which will serve as a long-term goal. smarter tax is considered.

Excise taxes account for half the price of petrol and the Treasury Department has recently come under pressure to cut it by 5-10% to offset the rise in the cost of living due to the rise in oil prices. to moderate.

Liberman opposed a cut in the fuel tax so as not to encourage the use of cars on Israel’s already congested roads, but it’s also hard to raise anything again after it’s been cut.

But Prof. Yaron suggested that congestion tax was the right tool to ease congestion on Israel’s roads. He said: “Without tax, individuals only consider costs in terms of time and fuel consumption, not that they cause congestion on the roads. Congestion taxes will push costs down on people who choose to travel in their own car during peak hours. “

However, the Bank of Israel does not expect the congestion tax shift to happen tomorrow due to public opposition and because congestion tax is difficult to implement from a social point of view. But the Bank of Israel believes that when alternatives to public transport become available that will reduce car dependency, it would be possible to mobilize support for the measure.

The congestion on Israel’s roads is increasing rapidly and is high by international standards. The Bank of Israel also said a congestion tax would mean more to car owners in central Israel and less to motorists in the periphery.

Published by Globes, Israel business news – – on March 30, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

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