Israel has the greatest average traffic density per kilometer among OECD countries. This data is presented in a new OECD paper examining Israel's green taxation. The paper commends the unique method of calculating the green tax Israel formulated in 2009, claiming that it is "innovative and creative in referring not only to CO2 but taking into account five different pollutants and using the vehicle purchase tax to differentiate car models according to their relative impact on the environment."
According to the paper, the effect of green taxation on the purchase of cleaner vehicles has been "tremendous" and by 2014 about 83% of the private cars sold in Israel were in the lowest pollution grades, compared with 19% in 2009.
At the same time, OECD researchers claim that the green tax had the side effect of drastically reducing the real purchase tax for many cars, due to green tax benefits, and has therefore reduced family car prices and led to new car sales skyrocketing. The OECD claimed that this leap has facilitated a substantial increase in traffic congestion, resulting in a rise in pollutant emissions, despite decreasing emission per vehicle.
The OECD paper says that the Israeli green tax calculation model could serve as an example for other administrations, while "care is needed to avoid turning it into a subsidy encouraging car purchases." The organization also calls on Israel to take complementary steps that will decrease the motivation to use a car, such as an accelerated investment in land-based public transportation, reducing vehicle-related employee benefits and introducing a congestion tax.
At the present, professional-level officials in the Ministry of Environmental Protection and the Tax Authority support a congestion tax, which imposes a tax based on the driver's actual contribution to congestion and air pollution, while the Ministry of Transportation resolutely opposes such a tax.
Published by Globes [online], Israel business news - www.globes-online.com - on July 24, 2016
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