‘Green tax’ to cause rise in local car prices
The Israel Tax Authority on Sunday published the new formula for calculating the environmental tax on vehicles. It comes into effect on January 1, 2017.
The formula gives each car an environmental rating that puts it in one of 15 different groups, with the importer paying a different environmental tax for each group.
The new formula is much stricter than the previous one, with the most popular models in Israel being classified in higher pollution groups. The environmental-tax benefit for these vehicles is therefore slated to be reduced by thousands of shekels.
Auto-industry sources said if no significant change occurs in the exchange rates, the new formula would inevitably cause a 2 percent to 5% price increase for many models, with most of them applying to the cheaper and more popular models, headed by minicars, currently the main beneficiaries of the environmental-tax benefit.
On the other hand, there will be no significant change in the price of luxury cars and four-wheel-drive vehicles, because these are already classed in the highest pollution categories, and the environmental-tax benefit is irrelevant to them.
In contrast to the previous revision of the formula, the 2017 one will also affect a number of popular hybrid car models, such as executive hybrid cars, current classed in pollution group 2 and which will be moved to pollution group 3 when the revision is implemented. As a result, they will automatically losing the tax benefit granted in Israel for such cars (30% purchase tax instead of 82%).
The change for these cars is expected to be extremely significant, with prices rising by tens of thousands of shekels. Imports of the models may even come to a complete halt.
As happened two years ago, a massive wave of purchases by auto importers and car-leasing companies can be expected toward the end of the year to avoid the price rises, auto-industry sources said.
The revision of the environmental tax is coming at a difficult time for the Transportation Ministry, which in its new campaign accompanying the new Auto Licensing Law is currently promising that prices of new cars will fall. As of now, it appears that prices will rise in the coming months.