The Israel Tax Authority intends to substantially revise the formula for calculating the "green" tax on vehicles. A draft circular distributed today in the auto industry indicates that the tax revision scheduled to take effect at the end of the year will include a substantial change in the emission value in the formula used to calculate the tax credit for various new vehicle models.
The revision means that many new vehicles, mainly in the lower end of the market, from mini-cars to family cars, will be placed in a higher environmental tax bracket than the current one, and will therefore receive a lower tax credit.
For consumers, this means that prices for many models in the cheaper and family market segments will rise by thousands of shekels, while prices of more expensive vehicles, on which the environmental tax has only a negligible effect, will rise to a lesser degree.
Industry sources responded by saying that this would mean a reduction in the bargain campaigns, and in certain cases, a direct price rise for many vehicle models, which will also cause higher leasing prices. The sources added that despite the Minister of Finance's explicit promise not to raise taxes to pay for Operation Protective Edge, this amounts to an increase in an indirect tax, aimed at raising hundreds of millions of shekels for the state treasury.
Published by Globes [online], Israel business news - www.globes-online.com - on September 22, 2014
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