Vehicle taxation should be reconsidered
Israel's Case-Study, and A Wider Comparison
Vehicle taxation is a global issue. When considering the appropriate tax regime for vehicles, states consider a variety of factors. Among others, vehicle taxation takes into consideration traffic congestion (loss of time), environmental issues such as air pollution, accidents, noise, land use for roads and parking lots, costs of control and enforcement system, damage to the natural environment, and much more.
Israel imposes purchase tax on vehicles, which is a tax quite equivalent to GST or excise duty.
As will be presented below, in 2022, apparently, Israel's vehicle taxation, imposes 83% purchase tax on vehicles, is probably the highest in the world.
Vehicles are a daily, routine product that exists in almost every home worldwide. A vehicle isn't a luxury product anymore, but Israel, according to the tax rate, still considers it a luxury.
The high tax rate has not achieved its goal, to discourage the usage of personal vehicles and shift to public transport.
The high tax regime encourages repetitive debates between importers and that customs authority, concerning the vehicles value, for customs purposes.
A reform in this field is needed. Maybe it's time for Israel to reinvent to wheel in this area, and impose a fixed tax, ignoring the vehicle's price.
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Israeli Cases in favour of the importer
Civil Case (Jerusalem magistrate court) 11869-08-18 adv. Imad Awida Vs. The state of Israel-tax authority-customs and VAT department (11.10.20).
Appeal civil Case (Jerusalem district court) 63093-11-20 The state of Israel-tax authority-customs and VAT department vs. adv. Imad Awida.
Civil Case (Ramla magistrate court) 45331-05-16 Gil Chankes Vs. Ashdod customs house (12.6.19).
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Israeli Cases in favour of the customs authority
Civil Appeal (Supreme court) 256/17 Hershkowitz Shay et al. Vs. The state of Israel – Customs and VAT department (18.8.19).
Civil Case (Center district court) 37198-11-13 Hershkowitz Shay et al. Vs. The state of Israel – Customs and VAT department (31.10.16).
Civil Case (Magistrate court, Tel Aviv) 7340-03-16 Yaron Zeev Sorek. Vs. The state of Israel – Customs and VAT department (17.9.21).
Civil Appeal (District Court, Tel-Aviv) 22846-01-22 Yaron Zeev Sorek. Vs. The state of Israel – Customs and VAT department (7.2.22).
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Israeli customs tariff and purchase tax and exemption tariff order on goods (2022).
Order frame: https://shaarolami-query.customs.mof.gov.il/CustomspilotWeb/en/CustomsBook/Import/OrderFrame
Vodka of HS code 22.08-6000-https://shaarolami-query.customs.mof.gov.il/CustomspilotWeb/en/CustomsBook/Import/ImportCustomsItemDetails?customsItemId=3614
Cigarettes of HS code 24.02-2000. Retrieved from https://shaarolami-query.customs.mof.gov.il/CustomspilotWeb/en/CustomsBook/Import/ImportCustomsItemDetails?customsItemId=26650
Batteries of Subheading 85.07-1020. Retrieved from https://shaarolami-query.customs.mof.gov.il/CustomspilotWeb/en/CustomsBook/Import/ImportCustomsItemDetails?customsItemId=7623&isDiscountCode=False
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Rules of HS code 87.03- Retrieved from https://shaarolami-query.customs.mof.gov.il/CustomspilotWeb/he/CustomsBook/Import/Rules?customsItemId=18359
HS code 87.03-2390- Retrieved from https://shaarolami-query.customs.mof.gov.il/CustomspilotWeb/en/CustomsBook/Import/ImportCustomsItemDetails?customsItemId=8906
Vehicle safety belt of HS code 87.08-2100 Retrieved from https://shaarolami-query.customs.mof.gov.il/CustomspilotWeb/en/CustomsBook/Import/ImportCustomsItemDetails?customsItemId=8077
Yachts of HS code 89.03-9321 Retrieved from https://shaarolami-query.customs.mof.gov.il/CustomspilotWeb/en/CustomsBook/Import/ImportCustomsItemDetails?customsItemId=31264&isDiscountCode=False
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Sweet drinks. Retrieved from https://www.gov.il/he/departments/publications/reports/pa281221-1
Oils. Retrieved from https://www.gov.il/he/departments/publications/reports/pa151121-3
E-Cigarettes. Retrieved from https://www.chamber.org.il/media/165894/%D7%A7%D7%95%D7%91%D7%A5-%D7%94%D7%AA%D7%A7%D7%A0%D7%95%D7%AA-%D7%A9%D7%99%D7%A2%D7%95%D7%A8%D7%99-%D7%9E%D7%9B%D7%A1-%D7%9E%D7%A1-%D7%A7%D7%A0%D7%99%D7%99%D7%94-%D7%95%D7%AA%D7%A9%D7%9C%D7%95%D7%9E%D7%99-%D7%97%D7%95%D7%91%D7%94-1999.pdf
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The Israeli Luxury Tax Ordinance (1949) (repealed).
The Israeli Purchase Tax Law (Goods and Services), 1952.
The Israeli Tax Authority publication of 2018, a review on the vehicle industry. Retrieved from https://www.gov.il/BlobFolder/reports/tax-reviewvehicle/he/Publications_VehicleReview_vehicle2018.pdf
The Israeli Value-Added Tax Law, 1975.
Various Vehicle Tax Rates:
New Zealand: https://www.govt.nz/browse/tax-benefits-and-finance/tax/gst-rate/
Poland: (Poniatowski, 2020).
China: (Ma, 2021).
(Østli, 2021). Philippines:
(Yasol, 2017). (Preece, 2016; Preece, 2015).
Singapore: (Yasol, 2017).
Walla (2022). Retrieved from https://cars.walla.co.il/item/3483185
Yasol, M. (2017). Restructuring the excise taxation of motor vehicles, NTRC Tax research journal, Philippines. Retrieved from https://ntrc.gov.ph/images/journal/2017/j20170102b.pdf
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