Tax Breaks For Cars in Israel Poorly Targeted

September 6, 2012 Taxation in Israel

Efficient carsTEL AVIV – Israel is looking to introduce tax breaks for the purchase of safe and efficient cars, but representatives from the auto industry are already claiming that the current set of proposals will only have the opposite effect.

Next week the Ministry of Finance of Israel is scheduled to put forward a new proposal for a tax break on car purchases based on the safety features of the vehicle and to amended the tax breaks currently offered on the purchases of environmentally efficient cars.

The Ministry is currently reevaluating the criteria it uses to judge the environmental impact of cars, and will amend the tax breaks offered on the purchase of vehicles in order to better reflect the amount of emissions that they produce.

Car manufacturers have previously obtained preliminary versions of the proposed judging criteria, and are now claiming that the new tax incentives will greatly reduce the benefits of buying small economical cars, but will not affect the price of large inefficient cars.

Next week car makers will be invited to submit an official comment on the incentives, although several manufacturers have already come forward to say that the new tax breaks will be counterproductive to the government’s stated goal of reducing pollution.

The Finance Ministry will also unveil a new tax break which will be available to individuals when purchasing cars with advanced safety features.

The measure is aimed at encouraging individuals to purchase cars with proximity sensors and driver assistance technology intended to reduce the occurrence of crashes.

Car importers and manufacturers have already commented on the potential tax break for safety features, saying that it will need to be very significant, as the technologies suggested by the Ministries are only found on high-end cars and are often not available to mid-level and budget automobiles.

Photo by NRMA New Cars