The Ministry of Finance plans to raise the tax on coal from NIS 45 per tonne to NIS 190 per tonne, which will boost the state's revenue from this tax by some NIS 1.6 billion in 2015.
The plan formulated in the Ministry of Finance has been sent to the Ministry of Energy and Water Resources for comment.
If the move goes ahead, it should mean a 6-7% rise in the price of electricity. Electricity prices, however, are determined by the Electricity Authority, which is likely to impose a more moderate rise, or no rise at all, because of the growing use by the Israel Electric Corporation of natural gas, which is much cheaper.
Electricity tariffs were meant to fall gradually but substantially from the first quarter of 2015 onwards, thanks to the use of gas. The plan now is to raise the tax on coal in such a way that the price of electricity will not rise, or will even fall, if by less than originally intended.
Moreover, Minister of Finance Yair Lapid has declared several times in the past few weeks and months that taxes will not be raised at all, this despite the rise in expenditure and fall in tax revenue because of Operation Protective Edge in the Gaza Strip, so it is hard to see him letting the price of electricity rise.
The Ministry of Finance said in response, "This is a proposal that is being examined as part of the proposals that will be brought before the government for approval. Because of the extensive pollution caused by the use of coal, the switch to natural gas needs to be encouraged. In any event, the electricity tariff can be expected to fall in 2015."
Published by Globes [online], Israel business news - www.globes-online.com - on August 17, 2014
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