In April 2012, the Knesset Economic Affairs Committee met to discuss car prices and competition in the car market, following reforms implemented by the Ministry of Transport. That respected gathering set a kind of final target to be achieved if and when the complex reform was implemented: a 10% reduction in the price of new family cars.
But it turns out that what one hand of the government is doing is not known, or is ignored, but another hand. The promised 10% reduction in car prices is likely to turn into a price hike of 5% or more for most popular cars.
How did this happen? First came the VAT hike, which automatically raised car prices by thousands of shekels. Meanwhile, the government remembered that it still faced a huge budget hole, so it turned, almost as a matter of course, to the well-known ATM known as the Israeli driver. First the price of gasoline was raised by an amount that is hard to explain, and now comes the green tax update, which is covered in a magnificent environmental wrapping.
The small print of the updated green tax formula, which will be announced next week, does not tell ordinary people much. They include ambiguous and arbitrary emissions values, which are multiplied by various numbers, set by learned researchers from Amsterdam. But the bottom line result will be very clear to everyone on January 1, 2013: the price of almost every family car will rise, some by as much as NIS 5,000, including many (formerly) cheap compacts, many of which were being relied on as a solution to high gasoline prices.
What will not be affected? Well, that is not hard to guess. Prices for big, polluting, gas-guzzlers will not rise by a penny, and the purchase tax ratio between them and energy-efficient cars will narrow. Big cars will get another benefit. The tax breaks for sophisticated safety systems, which are mostly standard items only in luxury cars, will lower their prices. In other words, if you are rich, your life is worth more.
By the way, the government decision on the austerity plan in July, which approved the green tax update, was officially described as a means for raising the tax burden on big expensive cars, such as SUVs and limousines. Did anyone in the government read these decisions before voting for them? It apparently doesn’t really matter.
Published by Globes [online], Israel business news - www.globes-online.com - on September 5, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012