Summary
– Finance Ministry imposing decrees on electric car owners to increase government income
– Purchase tax on electric cars increased from 20% to 35%, with further increases expected in the coming years
– Travel tax of 15 agorot per kilometer for electric car owners starting in 2026
– Cancellation of discount in vehicle licensing fee for electric car owners starting in 2025
– These changes are expected to bring in significant revenue for the state treasury, with estimates of over NIS 1 billion in the coming years.
Article
The Finance Ministry has implemented measures to increase government income by targeting electric car owners in Israel. These measures include an increase in the purchase tax on electric cars, with the tax rate set to rise gradually over the next few years. Additionally, a travel tax will be imposed on electric car owners starting in 2026, based on the distance they drive. This tax is intended to offset the revenue lost from traditional fuel taxes, as electric cars do not contribute to air pollution in the same way gasoline and diesel vehicles do.
The increase in purchase tax, along with the introduction of a travel tax, is expected to generate significant revenue for the government. The Finance Ministry estimates that the initial tax increase alone will bring in approximately NIS 1 billion, with further increases projected to bring in even more funds as electric car sales continue to rise. The travel tax, set to be implemented in 2026, is expected to generate around NIS 300 million from the approximately 100,000 electric cars currently in Israel.
In addition to the tax increases, the Finance Ministry also plans to cancel the discount in vehicle licensing fees for electric car owners. Currently, all electric car owners pay a uniform licensing fee of NIS 530 per year, regardless of the vehicle’s value. The cancellation of this discount, scheduled to take effect in 2025, aims to save the government around NIS 170 million annually. This measure will bring the licensing fees for electric cars in line with those for traditional vehicles, which can reach up to NIS 4,700 per year.
The government’s decision to target electric car owners for increased taxation is part of broader efforts to boost revenue for funding essential services, such as security costs and post-war reconstruction. Electric cars have seen a surge in popularity in recent years due to their environmental benefits, but the government aims to ensure that these vehicles contribute their fair share to public finances. By imposing higher taxes on electric car owners, the Finance Ministry aims to create a more equitable tax system that takes into account the changing landscape of transportation and energy consumption.
While these tax measures may be unpopular among electric car owners, they are seen as necessary by the government to address budgetary challenges and fund critical services. The Finance Ministry argues that electric car owners should bear a greater tax burden to offset the revenue lost from traditional fuel taxes, as well as contribute to overall government income. As electric vehicles continue to increase in popularity, the government will likely explore further measures to ensure that electric car owners contribute their fair share to public finances.
Overall, the tax increases and cancellation of discounts for electric car owners in Israel are part of a larger strategy to boost government income and address budgetary challenges. These measures are intended to create a more equitable tax system that ensures all vehicle owners, regardless of their choice of transportation, contribute to public finances. As the government continues to monitor the impact of these measures, further adjustments may be made to ensure a fair and sustainable revenue stream for funding essential services in Israel.
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