Tax on cars in Israel is one of the highest among OECD countries
Photo: Joe Kot
Yaron Zelekha
Photo: Ido Erez
Auto market to open up for competition?
Finance Ministry's former Accountant-General Yaron Zelekha appointed to head committee tasked with examining barriers to competition, formulating recommendations for reducing market concentration
Transportation Minister Yisrael Katz on Wednesday appointed former Ministry of Finance Accountant-General Yaron Zelekha to head a new committee tasked with examining the competition in Israel's
auto market.
Tax on cars in Israel is one of the highest among OECD countries and can reach 83% of the car's value (before green tax deductions) as compared with 40% in west European countries.
Zelekha's job will include looking into the main barriers to competition in the market and formulating recommendations for reducing market concentration.
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According to the Israeli tax authorities, between January and June 2011, government revenues from car and spare-part imports reached some NIS 5.43 billion ($1.52 billion) – an 8% rise as compared with the same period in the previous year.
Tax revenues are a major source of income for the Ministry of Finance and were discussed in the Tax Authority's report last year, in which it was determined that high tax rates on cars in Israel stems among others from a historical approach to cars as a luxury item.
Nonetheless, the Authority stressed that "tax cuts are unlikely in the near future due to the importance of such revenues".
According to the Ministry of Transport, Zelekha's committee will formulate recommendations for reforms in the car market to increase competition and will examine, among others, cross holdings among car importers, leasing companies and garages.
One of the main sources of income for car importers is the spare-parts sector and its privatization can cut repair costs.
Additionally, the committee is to handle is the promotion of a law that will require importers to service all cars imported to Israel whether by parallel imports or by the importer itself.
Minister Katz had in the past attempted to open the car market to parallel importing but failed, however, to effect any real change in this area.
The committee will also handle electric car imports on the backdrop of permits issued by the Ministry of Transport's motor vehicle division for the import of hundreds of electric vehicles.
Click here to read this report in Hebrew
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