The Ministry of Finance, it was reported last week, is mulling the promotion of use of hybrid cars by lowering their use value for tax purposes. The idea behind the move, which was reported by "Yediot Ahronot," is to encourage leasing companies to buy more of these cars, in order to give a boost to environmentally-friendly cars on Israel's roads. In an unrelated move, senior officials at the Ministry of Finance, the Ministry of Foreign Affairs, and the Ministry of Transport, will now be entitled to a hybrid car from the state (although they will have to finance the extra cost from their own pockets).
The pollution that vehicles generate is a grave environmental problem, and any move that reduces the damage is welcome. That said, it is hard to ignore the fact that when it comes to green cars, the Finance Ministry repeatedly makes half-hearted efforts.
The first car manufacturer to take the risk of producing a hybrid car was Toyota, which created the "Prius."
The move's success, from the aspect of public relations, is unparalleled in the history of the motor industry. "How I swapped my Ferari/Jaguar/BMW for a humble Prius," has became a standard line in interviews given by celebrities in the UK and Germany, and there's no mistaking the message; the interviewee is not merely handsome/talented/successful, but is also deeply concerned about the future of the human race. So he drives a hybrid car. So effective is the message, that it rapidly spread from Europe to the environmentally nonchalant US and, as is usually the case, it has finally found its way to us. A company like Toyota will not miss the opportunity to exploit the hype; this year, or next year at the latest, it will become the world's largest vehicle producer.
The problem is merely the regrettable difference between PR and reality. Prius's emission rate is relatively low - 104 grams of CO 2 per kilometer, (the other hybrid car sold in Israel, the Honda Civic, emits 109 grams per kilometer), but there are other cars whose pollution rate is slightly lower. Volkswagen, for example, produces a diesel model of its Polo called Blue Motion, which emits just 99 grams per kilometer. In other words, it causes less pollution than the much-vaunted hybrid models.
Want any more examples? The Mini One Diesel emits 104 grams of CO 2 per kilometer (the same as the Prius, and less than the Honda Civic); the diesel model of the Renault Cleo emits 115 grams per kilometer, as does the diesel version of the Peugeot 206. The miniature Smart emits 112 grams per kilometer, while the Peugeot 107's fouling of the atmosphere totals 109 grams per kilometer.
What do all these cars have in common? They are not imported, or will cease to be imported to Israel. It's not hard to understand why. While hybrid cars benefit from good public relations and a much-reduced low rate of purchase tax (30% instead of 84%), other "clean" cars do not qualify for any tax breaks at all. Quite the contrary, diesel cars, the modern versions of which are cleaner than petrol cars, are more expensive to run because of all the penalties people have to pay in buying and maintaining them. Furthermore, due to the inequality created by taxation, Israel's vehicle market is dominated by the leasing companies which purchase 60-70% all the new cars delivered in Israel, and they are not in the least interested in environmental concerns. The preferred choices of the big leasing companies - such as the Mazda 3, Toyota Corolla, Mitsubishi Lancer, and Ford Focus - that fill car parks in Ramat Hehayal, Raanana, and almost everywhere else, - cause a lot more pollution, 160-170 grams CO 2 per kilometer.
A reasonable person will find it difficult to make sense of all this data, but the Green Tax Committee should do this for him. It's difficult to understand what is going on there. What could be simpler than charging a low rate of tax on cars that do not cause much pollution - petrol, diesel, or hybrid - and a high rate of tax or penalty on cars that produce a lot of pollution? Or perhaps what we have here is yet another public relations exercise; the Finance Ministry wants to portray itself as being environmentally friendly, without giving up the tax revenue on cars.
Published by Globes [online], Israel business news - www.globes.co.il - on October 28, 2007
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