Go Hybrid and Pay Less Car Tax in Israel

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The Israel finance ministry is planning new regulations on car purchasing, with special discount incentives for purchasing hybrid cars, according to Reuters.

The new changes are being planned to help alleviate the increasing air pollution caused by cars, as well as to save energy costs. One of the new regulations will be increased taxes and duties on larger, gas guzzling cars, including SUV models.

Alongside these will be special discounts for people to buy hybrid models, as a special payment for people who decide to junk older cars.

Presently, purchase tax on many car models is 77% of the car’s imported value. This percentage is expected to be raised to 92%. Fuel taxes have also been increased in recent weeks, with further increases expected.

On the plus side for car buyers, the taxes on hybrids will be reduced to 30%. Israel¬† Finance Minister Yuval Steinitz, was quoted by a Reuters reporter that the increased numbers of both commercial and private vehicles on the country’s motorways has resulted in increased pollution as well as demand for fuel, which is imported.

Steinitz said that the government hopes that people will be induced to purchase environmental friendly cars due to the special tax reductions; and to “junk” old cars more than 20 years old by receiving special rebates of 3,000 Shekels (US$750) for getting rid of the old clunkers.

It is estimated that at least 70,000 old cars are still being driven on he roads; and all cars older than 1995 are not even required to have exhaust emission tests made on them.

While all of this sounds great, it must be noted that the high price of all cars in Israel is due mainly by high import duties and purchase taxes, including 15.5 % VAT, which is also slated to be increased to 16.5%.

Most of the old cars are still on road because their owners simply do not have the money to purchase a newer, more fuel efficient one.

The article also made no mention of all electric cars, which are now being developed in many countries, including one being developed by the Israeli Better Place company now placing charge stations at the work places of large companies, like Teva, Netafim and Pelephone.

When these cars do become available, the government will most likely offer incentives for purchasing them as well.

More on green and not-so-green cars:

  1. Does Israel Really Need the INFINITI Luxury Car?
  2. Will Israeli Hightech Workers Lose Their Leased Cars and Pay Taxes on Parking Spots As The Government Goes Green?
  3. A Mercedes Luxury Hybrid is to Hit the Middle East in 2009
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9 thoughts on “Go Hybrid and Pay Less Car Tax in Israel”

  1. Hey thanks for the information. Its good that special discounts will be offered to people who buy hybrid models.

  2. Laurie says:

    Interesting perspective; I’m glad that I stumbled upon your site, gives my world view a new look. Good article, some food for thought from the commenters, too.

    Laurie, ecoki.com

  3. Maurice says:

    TATA, the Indian carmaker, is putting out a car costing around $2,500 (whateer that is in rupees). Why can’t cars be sold cheaper here – it has nothing to do with the enviornment. Cars are simoply another source of revenue for a government that can only tax the poor – the rich find ways to avoid paying most income and revenue taxes

  4. Marcus says:

    According to a Globes article I recently read, the new purchasing tax for electric vehicles will be 10%. Additionally, the ministry of the environment and the ministry of transportation have developed a 15 category classification system that will classify vehicles according to their fuel efficiency and emission levels and will give out tax rebates from the new 90% tax accordingly. Installing devices in the cars’ muffler to reduce emissions will also give car owners a tax rebate.
    In another article by globes, it said that a number of Israelis have already ordered SUVs and luxury vehicles to be sent to Israel via airplane to ensure that the vehicle arrives before the august 1 tax is put into place.
    This new tax seems like a good first step for implementing greener cars on the road, but i agree that there is a bit of an economic issue with car owners getting their old cars off the road today and switching to newer cleaner cars which are relatively expensive. Its not like cleaner cars are getting much cheaper, its more like less clean cars are getting more expensive.

  5. Mike says:

    Good piece! Maybe the government will one day wake up and see just why many people can’t afford decent cars.

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