(Israeli) Government to reduce purchase taxes on hybrid cars

Government to reduce purchase taxes on hybrid cars (Click here)

By Haaretz Staff

Though there are currently only seven hybrid cars in Israel, importers are hoping to boost this total soon, thanks to a sharp reduction in purchase taxes recently.

Currently, the only model available in Israel is the Toyota Prius, but the Honda Civic IMA will soon go on sale here as well.

A few months ago, the government decided to reduce purchase tax on hybrid cars from 102% to 40%. That brings the price tag for the Prius, for instance, down from NIS 240,000 to NIS 190,000.

That is still 50 to 100% higher than the prices of the best-selling gasoline-engine cars. However, hybrid cars consume much less fuel than do regular cars, so they offer significant savings on gasoline costs to compensate for the higher price.

In a campaign to boost awareness of the cars, Transportation Minister Meir Sheetrit took a test drive in a Prius Saturday.

Sheetrit said that he has asked the Finance Ministry not to increase the 40% tax on hybrid cars for at least the next 10 years. If this request is granted, and if, as expected, the car's price declines as the technology becomes more common, hybrids could become even more popular here than ordinary cars, he said.

To prove that the government believes in hybrid technology, it even purchased two hybrids itself - one from Toyota and one from Honda. These will apparently be given to the Environment Ministry, but Sheetrit said that he also plans to purchase a hybrid for his own ministry.

Worldwide, the Prius has been extremely popular, and Toyota has been unable to keep up with the demand. For this reason, it is allotting fewer than 15 cars a month to Israel. But Micha Carmon, CEO of Union Motors, which imports Toyotas, said that this quantity is insufficient. "The demand for these cars here in Israel is very high, and at this stage, we are unable to keep up with demand," he said.