As From January 1st 2005, the tax on diesel fuel was increased by 10 Agorot per liter. (100 Agorot = NIS1 )
The tax hike known in government circles as "energy reform," will lead to higher fuel taxes for the public, while certain pressure groups ( taxi drivers , truckers etc.) have a loophole to actually get a tax refund.
According to treasury officials, the "energy reform," means to lower, during the next three years the special licensing fee for diesel-operated vehicles. By the year 2007, the special diesel licensing fee will be abolished entirely.
In a briefing to the press, treasury officials said that until early last year the excise levy on diesel was 38 Agorot per liter. The treasury, however, raised it by mid-year to 58 Agorot. As of January 1st, it will be 68 Agorot per liter.
The latest treasury decree will expire in 2009, by which time the duty on diesel will have reached parity with that levied on gasoline.
The total increase of 30 Agorot per liter, over a few months, raises the state's tax revenue by about NIS 350 million a year.
The treasury has been scrambling to find ways to plug the holes forming in its 2005 budget, after spending heavily to attract new coalition partners into the government. Gestures to the Labor Party alone are expected to cost about NIS 600 million. The government can either finance those outlays by cutting the budget, or by finding new sources of income.
Certain pressure groups have strongly opposed the hikes in diesel tax. They include the organization of taxi drivers, contractors who are heavy users of diesel as well as road hauliers. To obtain their support, Mr. Netanyahu threw them a bone: The treasury, according to Netanyahu will refund diesel tax to select groups of users.
