Vehicle taxation should be reconsidered

Israel's Case-Study, and A Wider Comparison

  • Omer Wagner Bar-Ilan University,  Israel
Keywords: purchase tax, vehicles, taxation, environmental, international trade, Israel


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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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).
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Civil Case (Ramla magistrate court) 45331-05-16 Gil Chankes Vs. Ashdod customs house (12.6.19).
Civil Case (Tiberias magistrate court) 51148-11-15 Eyal Farach Vs. The state of Israel-tax authority (20.12.17).
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Civil appeal Case (Nazareth district court) 50042-06-16 The state of Israel vs. Imad Agbaria (30.10.16).
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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Order frame:
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Various Vehicle Tax Rates:
(Yasol, 2017).
(Basavanagouda, 2021).
New Zealand:
Poland: (Poniatowski, 2020).
China: (Ma, 2021).
(Østli, 2021). Philippines:
(Yasol, 2017). (Preece, 2016; Preece, 2015).
Singapore: (Yasol, 2017).
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