Gov’t Rakes in Record Taxes on Car, Gas Sales

Gas station in Israel. (Danielle Shitrit/Flash90)

Israel vehicle imports hit a record in 2016 – and so did government proceeds from taxes associated with the sale and operation of vehicles. According to data compiled by the Finance Ministry, the government collected NIS 12.33 billion ($3.16 billion) in purchase taxes on vehicles, a whopping 50-percent increase over the amount collected in 2015.

Purchase taxes on vehicles averages about 120 percent of the cost of a vehicle. A total of 286,728 vehicles were imported into the country in 2016, 12 percent more than in 2015. The figure does not include the amount the government collected in Value Added sales Tax (VAT), currently at 17 percent and added on to the total of the vehicle’s cost, including the purchase tax.

Also higher were grosses from taxes on fuel, which rose 4.5 percent in 2016 over the previous year’s. However, gas tax proceeds in December jumped significantly; the government collected 30 percent more in taxes from fuel in December 2016 than the same month a year earlier.

Also not included are proceeds from various other taxes and fees, like vehicle license and registration, license plate fees, the radio tax, etc. Altogether, the figures show, the government pulled in over NIS 40 billion in taxes and fees from the sale of vehicles and fuel – NIS 7.5 billion more than had been forecast.

Part of the reason for the big numbers, the Ministry said, was due to the fact that many people seeking to purchase vehicles did so at the end of 2016, preordering new models rather than waiting for 2017, when purchase taxes on several kinds of vehicles were to rise. As a result, the figures – sales, taxes and fees – for the beginning of 2017 are expected to be significantly lower than they were for those months the year before, officials said.