Your money in 2019, part 2: cars, buses, housing, tips

Buses Photo: Tamar Matsafi

Politicians want to be admired for protecting the environment - but without giving up tax revenues from cars and gasoline.

Cars: buying an environmentally friendly car may not be worthwhile.

The dominant theme in the Israeli auto sector in 2019 will be the environment. It will be the first year in which significant numbers of purely electric vehicles will be offered and sold in Israel. This does not refer only to expensive prestigious boutique vehicles aimed at Elon Musk admirers; there will also be family electric vehicles at affordable prices for private customers, or at least for vehicle fleets.

Continuation of this environmental trend depends directly on the existing of a different type of green - the kind that you keep in your wallet. State revenues from vehicle and fuel taxes amount to NIS 15 billion a year, making the auto industry one of the Ministry of Finance's most important and beloved cash cows. Decision-makers are faced with a conflict of interests: on the one hand, encouraging environmentally friendly and clear transportation is desirable and welcome in the national sphere, not to mention that it looks good in political campaigns (and this is an election year).

On the other hand, continued penetration by such vehicles on a large scale requires growing tax benefits, and will threaten to reduce the state's enormous revenue from taxes on gasoline and diesel fuel in the long term. The chances of the state agreeing to forsake a resource that finances so many political fantasies are poor, certainly not with a hole in the budget in store. 2019 will therefore probably be a year of sitting on a high fence and trying to strike a balance between the two sides.

It is very likely that we will also see an attempt to have the cake and eat it, too, at least for public relations purposes. For example, the formula for the environmental tax on vehicles will be revised in mid-year. The aim of the revision is to make it harder to obtain the environmental tax benefits, and in the bottom line to increase the state's tax revenues. It is a safe bet that this measure will be accompanied by an aggressive public relations campaign wrapping it in an environmental coating and highlighting the Ministry of Finance's impressive achievements in encouraging more environmentally friendly vehicles on the road. In other words, cars and leasing prices will rise and state tax revenues will increase, but someone will have to persuade us that this is for our benefit.

The third directly and indirectly dominant aspect of the Israel auto market in 2019 is the Israeli auto-tech sector. This sector is now attracting a lot of attention and investments from the international auto industry to Israel, thereby preventing the government and the Ministry of Finance from continuing their abuse of the auto market and its customers under the assumption that no one in the world will see or hear it. The government also knows that another serious exit in this sector can help fill the state treasury - perhaps not on the same scale as the huge Mobileye deal, which totally eliminated the 2017 budget deficit, but it can certainly improve the overall picture.

Bottom line: A lot of politics and promises, but do not expect environmentally friendly vehicles at bargain prices.

Transport: No more cash payments for bus rides

Starting next week, Tel Aviv will join Jerusalem: passengers can ride buses in the greater Tel Aviv metropolitan region only with a Rav-Kav smart bus card, and will not be able to pay the driver in cash. The Ministry of Transport calls this "the public transportation revolution," although almost the same situation has prevailed in Europe for a long time. Drivers will no longer be cashiers, passengers can enter the bus through any door, buses will spend less time standing still at stops, thereby shortening travel time, and passenger service will improve. Why "almost the same situation" as in Europe?

If we look at the "revolution" at the level of a simple passenger, rather than the headlines, we will see several prominent disadvantages that will complicate our lives. The most conspicuous of these is that in contrast to Europe, cash cannot be used to load a Rav-Kav card. In London alone, there are over 3,000 machines that can be used to load travel cards by inserting cash into them. In contrast to London, a large proportion of public transportation users in Israel, especially buses are not tie-wearing businesspeople; they are people without credit cards: teenagers and pensioners. Another disadvantage is that most buses have no validation machines at the rear door. In Jerusalem, for example, there have been no cash payments for rides for six months, but in two thirds of the cases, passengers enter the bus through the front door, thereby jamming up the entrance. This could be prevented by placing validation machines by the rear door.

Senior citizens can still pay the driver in cash - something that is important and necessary. What about spontaneity, however? People without Rav-Kav cards who want to get on a bus that happens to be passing, tourists, or a child who didn't wake up on time for school and therefore did not get a ride from Daddy? They will still be able to travel by bus, but it will cost them double: they will have to buy an anonymous Rav-Kav card from the driver and load it on a machine on the bus.

Bottom line: even if it sounds imperfect, keep in mind that it is an important initiative by the Ministry of Transport designed to solve both overloading of bus drivers and make things easier for passengers in the future. The small malfunctions will be fixed later.

Housing market: The contractors will roll the costs onto housing prices

The eternal question in real estate is whether housing prices will go up or down. One thing can be stated with certainty about 2019: the legislation aimed at bolstering safety on construction sites will increase construction costs for contractors in 2019. That is of interest to everyone, because if construction costs the contractors more, housing prices will rise.

The legislation that passed its second and third Knesset readings last month and will become effective in February is the "Safety Assistant on Construction Sites Law." The new law states that in addition to a work manager, a safety assistant must be hired to help enforce safety on the construction site (sites on which a building over seven meters high and with an area of over 1,000 square meters is being constructed). This means that contractors will have to hire an extra worker to fill the position on construction sites and pay his or her salary.

In less than five months, companies in construction will also be forced to hire a permanent work manager, including for renovations. The 1988 law states that a work manager must be present wherever construction is taking place, among other things to oversee safety. Regulations issued by the Ministry of Labor, Social Affairs, and Social Services in 2014 list quite a few cases in which a work manager is not required. A regulation, however, is not a law, and it expired several weeks ago. Following an outcry by contractors, mainly renovation contractors, the Ministry of Labor, Social Affairs, and Social Services extended the regulation by six months, but it is possible that next April we will revert to a situation in which contractors will have to put another person to work wherever construction is taking place, which will impose a substantial addition cost on contractors that is liable to be rolled over onto housing prices.

Another decision that promises to improve safety on construction sites: an agreement signed in recent weeks by the Histadrut (General Federation of Labor in Israel), the Ministry of Finance, and the Ministry of Labor, Social Affairs, and Social Services changes the scaffolding standard on construction sites to the European standard, which is supposedly more advanced. At the same time, scaffolding contractors warn that the new scaffolding costs four times as much. A position paper by the Israel Builders Association, which represents the contractors, states that the change will immediately add NIS 8,000 to the cost of every new housing unit. The scaffolding contractors, incidentally, did not accept the calculation, and declared that the added cost would be NIS 15,000 per housing unit.

Bottom line: we will get safer construction sites, but the many years of neglect will probably be rolled over onto us in the coming year.

Labor market: Waiters' tips will be counted as salary

Starting on January 1, 2019, tips received by waiters and waitresses in restaurants and cafes will be considered part of the wages paid to them by their employer. "Tips in the restaurant sector should be regarded as the restaurant's income, and any income gained by a waiter from tips should be considered his labor income from his employer, even if the tip was paid directly to the waiter, even if it did not pass through the cash register, even if it was paid through a different means than that used to pay for the meal, and even if it was not recorded in the restaurant's books or service log," the National Labor Court judges ruled in a March 2018 judgment, which will take effect in 2019.

This means that starting in 2019, tips left for waiters and waitresses by restaurant customers belong to the business, which must use them to pay the salary of the employee who received the tip. The employers, the restaurant and café owners, must take into account the waiters' and waitresses' tips in making pension and National Insurance Institute deductions from the employees' salary. Another consequence is that the National Insurance Institute must take into account waiters' and waitresses' salary, including tips, in calculating unemployment benefits to which a laid-off employee is entitled.

What will not change? As the National Labor Court itself said, and as Adv. Tali Yaron-Eldar and Adv. Rani Schwartz told "Globes," the Court ruling on tips has no effect on taxes, because the Court lacks authority to make any decisions about taxes.

Bottom line: how will all of this affect the customers? The effect will be marginal, or will go unnoticed. Provisions for waiters' and waitresses' social rights will increase, but the salary they get in cash will be reduced accordingly, and will go through the employer's cash register.

Published by Globes, Israel business news - - on January 2, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Buses Photo: Tamar Matsafi
Buses Photo: Tamar Matsafi
Ela Levi-Weinrib, Amiram Barkat, and Yuval Azulai
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