Rise in coal excise seen erasing electricity rate cut

Power lines  photo: Eyal Izhar

Coal represents one third of Israel Electric Corporation's fuel mix.

In the 2019 budget, due to be approved by the government in the next few days, the Ministry of Finance has raised the excise on coal from NIS 46 per tonne to NIS 102. As a result, the reduction in the electricity tariff that the Electricity Authority planned for the beginning of this year will be cancelled.

Coal currently represents a third of the fuels mix that the Israel Electric Corporation uses for power production, and so its price has a substantial effect on the price of electricity. Six months ago, the Electricity Authority announced a 2% cut in the electricity tariff to come into effect at the beginning of 2018, but according to a Ministry of Finance source, the planned cut will be entirely offset by the increase in the excise.

Talking to "Globes" today, the source said that "even the new tax rate does not reflect the environmental damage caused by burning coal." According to the recommendations of the inter-ministerial committee on taxation of oil alternatives, issued last year, the excise on coal should rise to NIS 216 per tonne.

This is not the Ministry of Finance's first attempt to raise the excise on coal. On the previous occasion, the move was blocked by then-minister of finance Yair Lapid.

The Electricity Authority stated in response: "The decision on the reduction in the electricity tariff is due to be made in the Electricity Authority plenum next week. The Ministry of Finance's new plan to raise the excise on coal has not been in considered in it. Insofar as the Ministry of Finance intends to raise the excise on coal in 2018, this will be reflected only in the tariff for 2019."

Published by Globes [online], Israel business news - www.globes-online.com - on January 1, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Power lines  photo: Eyal Izhar
Power lines photo: Eyal Izhar
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