New tax and benefit cuts — drivers will have to pay more
Israel's auto market is frozen in anticipation of the elections, but afterward, the authorities may change tax rules. The Finance Ministry is considering updating the "green formula," reducing benefits for hybrids, and introducing a mileage tax for electric vehicles at 15 agorot per km. The reason is the budget deficit and the loss of over 2 billion shekels per year in fuel excise tax due to the shift to electric vehicles.
Israel's automobile market is frozen in anticipation of the elections, but afterward, the authorities may quickly change tax rules and reduce benefits for drivers. As Ice writes, the deepening state budget deficit will force the next government to seek new sources of revenue. The Finance Ministry has a "Commission on Green Taxation" that is preparing changes. One of the main problems is the reduction in revenue from fuel excise tax due to the shift to electric vehicles and plug-in hybrids, which account for about 40% of new car sales. The state could lose more than 2 billion shekels in annual revenue by the end of the decade. The commission is considering updating the "green formula" to reduce benefits for hybrids, introducing a mileage tax for electric vehicles at a rate of 15 agorot per km, and reducing benefits for company cars. Based on the measures under consideration, the changes are becoming a question not so much of whether they will happen, but of their scale and timing.