State Rakes in Billions From Car Taxes, Fees

Cars brought on cargo ships, imported from abroad, seen parked at the port in the Southern Israeli town of Ashdod, before being transported away for sale. June 23, 2014. Photo by Moshe Shai/FLASH90 *** Local Caption *** îëåðéåú áðîì àùãåã éáåà
Cars brought on cargo ships, imported from abroad, seen parked at the port of Ashdod. (Moshe Shai/Flash90)

The state took in NIS 9.24 billion from taxes on the purchase of motor vehicles, the Tax Authority reported – 10 percent less than in 2014, although more 2015 model cars were sold than 2014 model cars. A total of 246,500 vehicles were imported in the 2015 model year, 5.5 percent more than the 235,500 imported in 2014.

The reason for the seemingly contradictory figures, according to industry experts, was the institution of a new “green tax” on motor vehicle engines that released too-high emissions. The tax went into effect on January 1, 2015, which prompted many purchasers of new vehicles for that year’s model to pay for their vehicles in advance, to avoid paying the tax. Thanks to that tax, the average taxes paid by purchasers of new vehicles in 2015 was NIS 33,858, compared to NIS 31,998 in 2014.

NIS 8.383 billion of that sum was due to purchase tax, whole NIS 400 million came from import duties. Purchase tax in recent years has become the major contributor to high vehicle prices in Israel, as trade agreements with European countries, the United States and Far Eastern countries have limited the amount of import duty that can be leveled on vehicle purchases.

It should be noted that duties, green taxes and purchase taxes account for only about half of what the government makes on vehicles. Other taxes include an excise tax on fuel, which alone brought in NIS 16.3 billion in 2015. VAT sales tax on the sales of fuel supply an additional NIS 4 billion.