Treasury to raise use value of company cars

The Finance Ministry plans to raise the use value of leased cars, because of the rise in the price of gasoline.

The Ministry of Finance plans to raise the use value of leased cars, because of the rise in the price of gasoline. The proposal is in the economic arrangements bill for 2013, and will reported generate hundreds of millions of shekels in tax revenues.

State Revenues Division director Dr. Michael Sarel made a broad hint about the proposed measure in an interview with "Globes". Asked about the extensive of leased cars and the current method which effectively creates incentives to give company manages gas-guzzlers, he said, "That's true in the short term, but not in the long term. Changes have already been made in taxation to reflect the true cost of the car. I assume that if we see gasoline prices continue to rise, and discover that the use value increases as a result, we will presumably see changes in accordance with the use value of company cars."

Vehicle industry sources believe that such a measure will face strong opposition by big companies, employers, and even MKs who have previously blocked attempts to raise the use value of company cars. 220,000 Israelis currently have company cars, and they benefit from free gasoline, or double the mileage of a private car.

The use value of leased cars was doubled in 2009, after an effort of many years.

A senior source at the Manufacturers Association of Israel today strongly protested the Ministry of Finance's proposal to include the value of gasoline in the use value of company cars. He called it double taxation, first the heavy excise on gasoline, which employers pay, and then an additional tax on the use of the gasoline, which the Ministry of Finance wants to levy on recipients of company cars.

Published by Globes [online], Israel business news - www.globes-online.com - on August 29, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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