The change, meant to reduce the government’s deficit by NIS 400 million, is expected to add NIS 5,000 in taxes on the Ford Focus, NIS 4,250 on the Toyota Corolla, and NIS 1,250 for the Kia Picanto.
By Daniel Schmil | Sep.10, 2012

Prices on many of Israel’s most popular cars will rise sharply in January if the Israel Tax Authority has its way. As part of the Green Tax Reform, the authority intends to roll back tax reductions on cars by instituting more stringent fuel efficiency requirements.

The change, meant to reduce the government’s deficit by NIS 400 million, is expected to add, for example, NIS 5,000 in taxes on the Ford Focus, NIS 4,250 on the Toyota Corolla, and NIS 1,250 for the Kia Picanto.

The Green Tax Reform, in force since August 2009, divides car models into 15 pollution rankings: The lower the ranking, the larger the tax discount. Once the tougher criteria take effect, prices for manual transmission mini cars now averaging NIS 62,000 will rise by as much as NIS 3,000; family-sized cars averaging NIS 124,000 in price will go up around NIS 5,000; and cars with diesel engines will be NIS 5,000 to NIS 9,000 more expensive. Meanwhile, taxes on the purchase and use of electric and hybrid cars are being adjusted to give people an incentive to buy them.

Benefits for safety features

Along with the recent hike in value-added tax and devaluation of the shekel, the added taxes could significantly boost new car prices, pushing family cars into the NIS 130,000 price range.

The authority has also decided to cut taxes on new cars based on their safety ranking, presumably to soften the blow from the green tax hikes. Cars will be classed in eight categories of safety, based on such features as electronic stability control, blind spot monitors, emergency brake assistance systems, reverse backup sensors, tire pressure monitoring systems, and seatbelt warnings.

The list of features is long, but most are only available on luxury models in the NIS 300,000 price range, and the tax benefits will represent just a small fraction of their cost. So while prices for popularly-priced models without all the gadgetry will soar, well-appointed gas guzzlers are likely to cost a little bit less.

http://www.haaretz.com/business/green-taxes-will-push-up-prices-of-new-cars-in-2013-1.463787