The price cut is smaller than expected in view of the global drop in oil prices..
The price of fuel will fall NIS 0.27 at midnight on November 2 (Saturday night). The maximum price per liter of 95 octane gasoline at self-service filling stations will be NIS 5.98 excluding VAT and NIS 7.05 including VAT. A NIS 0.33 price cut had been expected.
Even though oil prices are at their lowest since 2010, the price of gasoline has fallen only NIS 0.57 in the past four months. The price of oil accounts for only 35% of the price of gasoline in Israel. The first factor determining the price of gasoline is the international price, which is set in the last four days of each month at the Lavera fuel exchange in France. The international gasoline price component accounts for only 35% of the final price at the gas stations. The second component is the excise tax, a tax set by the Ministry of Finance, and levied on diesel and other fuels, in addition to gasoline. Excise tax, the rate of which is linked to the Consumer Price Index, accounts for 41% of the price of gasoline. Another component is the sales margin of the gas stations, which is also fixed (9% of the gasoline price). In addition, 15% VAT is imposed on these three components on each gasoline purchase. We therefore also pay VAT on the price of gasoline, including the excise tax. In other words, we pay a tax on the tax.
Published by Globes [online], Israel business news - www.globes-online.com - on October 30, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014
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