Minister of Transport Miri Regev is instigating moves to cancel the congestion charge on vehicles entering Tel Aviv that is due come into force in 2026. The Ministry of Finance and the Israel Tax Authority are working on a tender for operating the congestion charge, after Regev froze preparations for publication in her ministry when she was appointed to her post.
The Congestion Charge Law was passed as part of the Economic Arrangements Law package of 2021, under the previous government. When Regev became minister of transport in March last year, she expressed fierce opposition to the law, and froze a tender by state-owned company Ayalon Highways, which is answerable to the Ministry of Transport, for the installation of entry gates to the Tel Aviv metropolitan area and for operating collection of the charge. In August last year, the Israel Tax Authority advertised jobs in a new unit to be responsible for the matter, that will draft policy on transport taxation, including a mileage tax and the congestion charge.
At the Globes Infrastructure Conference in March, Deputy Accountant General Oshrat David Dakar declared, "If the Ministry of Transport doesn’t carry out the project, the Ministry of Finance will. We’re a year behind because of the delay to the congestion charge. There’s no other source of finance." She was referring to the fact that some of the finance for constructing the Metro underground railway system planned for the Tel Aviv area will come from levies and charges. "The project is built on the assumption that there will be congestion charges," she said. "This has to be understood, there’s a law that is not being observed. The Ministry of Finance will be obliged to finance the largest project in the State of Israel."
The congestion charge is supposed to bring in revenue of NIS 1.3 billion in 2027. "Globes" recently reported that the Ministry of Finance and the Israel Tax Authority will publish a tender for the congestion charge gates by the end of this year in order to meet the provisions of the law.
The government ministries are thus in a bind. The congestion charge is anchored in law that is not actually being observed, it represents part of the financing model for the Metro and for public transport, and the development of public transport in the Tel Aviv metropolitan area, at a cost of billions of shekels, has been made conditional on the implementation of the charge.
On the other hand, the minister of transport has ordered her ministry to carry out preparations for fulfilling the law, and the preparations are now going ahead without the ministry’s involvement. Since additional bus services (more routes, greater frequency) have been made conditional on the congestion charge being imposed, there has been no budget for them this year, to Regev’s chagrin. Now, the charge is being advanced without her, and her ministry is also not benefitting form a budget for additional services, which is something in high demand on the part of the public, and accordingly on the part of local authority heads as well.
Regev will call for a discussion on the congestion charge in the government and for its cancellation or postponement, spurred by her objection in principle to the imposition of a tax on those entering the Tel Aviv area. She will argue that, because of the war and the economic crisis, it would not be right to collect such a tax, and that if a tax is imposed, greater resources than those agreed in the past should be allocated to public transport. It is not clear, however, from a legal point of view, whether the date of the law coming into force can be postponed by a government decision.
For its part, the Ministry of Finance supports implementation of the congestion charge for the very same reasons: the war and the economic crisis, which have emptied the government’s coffers. Ministry of Finance director Shlomi Heisler said in an interview with "Globes" that higher taxes would be introduced in the next budget, so it can easily be supposed that the ministry will oppose the cancellation of planned taxes. This is especially so when the congestion charge is earmarked for financing the infrastructure projects such as the Metro, which will add to economic growth. The congestion charge also has transport advantages, as it could restrain private car traffic entering the metropolis at peak hours.
Under the law, there will be three rings in Gush Dan: an inner, middle, and outer ring. The congestion charge will apply to vehicles crossing between these rings from 6:30 am to 10:00 am. For vehicles heading towards the center, the charge will be NIS 10 each in the middle and inner rings, and NIS 5 in the outer ring. Between 3 pm and 7 pm, the charge will be NIS 5 in both directions in the inner and middle rings, and NIS 2.5 in the outer ring.
Congestion charges apply in London and in Stockholm, and are intended to make drivers aware of the negative consequences of using private vehicles: air pollution, loss of time and damage to productivity, road accidents, and so forth. Alongside financing improvement in the supply of public transport solutions, the charge serves to reduce demand for journeys in private vehicles.
Regev’s bureau stated in response: "The minister opposes financing the center at the expense of the rest of the residents of the rest of the country. The intention of the Ministry of Finance of circumventing the Ministry of Transport with the aim of imposing the congestion charge planned by the previous government is a distortion that discriminates against the residents of the country in general and particularly those in outlying areas. It is inconceivable that people who come daily from the periphery to work and earn a living in the center should finance the residents of the center.
Published by Globes, Israel business news - en.globes.co.il - on July 21, 2024.
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