'Green tax' program hits the road

The goal of the program is to improve air quality by reducing emissions.

filling gas 88 (photo credit: )
filling gas 88
(photo credit: )
The Finance and Environmental Protection ministries laid out the first stage of their "green tax" incentive program on Monday. It will affect taxes on cars, gasoline and household photovoltaic solar-panel systems. The goal of the program is to improve air quality by reducing emissions. Initially, most of the program will focus on private cars; it will not affect trucks or buses because reliable data about their emissions is not available, according to the Treasury. The program will only affect new cars and not cars already on the road, although it will have an indirect effect on the used-car market. The new system will rank cars according to their pollution rates, which will appear on car registrations. The base tax rate for non-hybrid, nonelectric cars will be 92 percent, up from 75% today. A series of tax rebates will reduce that base depending on the car's pollution rating. Hybrid cars will continue to be taxed at 30%, as opposed to 75%, for the next several years, and electric cars will be taxed at 10%. The Treasury said the new tax rates were expected to generate NIS 400 million for the government coffers in 2009-2010. The pollution rating will be calculated based on the car's emissions of five basic types including NOx and carbon dioxide. Other factors that affect the rating will include the size of the engine, the type of gear system (automatic transmissions are less efficient than manual ones) and devices installed to reduce emissions. For the first time, new taxis will be taxed, although with the incentives there will still be many types of cars that can be bought tax-free. The Mazda 3 1.6 automatic with a 105 horsepower engine, for example, will have a pollution rating of 10 and a green grade of 197, with a tax rate of 80%. The Mazda 3 is one of Israel's most popular cars. All of the charts to calculate specific grades and ratings will be posted on the Web sites of the Finance, Transportation and Environmental Protection ministries. Two-wheeled motorized vehicles are not included in the program, although that decision will be reevaluated. To provide an incentive for household photovoltaic solar-panel systems, proceeds of up to NIS 18,000 per year from the feed-in tariff will be tax-free. Amounts above that will be taxed, although there is an option to pay a lump sum of 10% no matter how much money is made off of the system. There will also be changes to depreciation rates for solar water heaters and solar panels. Tax incentives will be given to companies that mix bio-diesel with regular gasoline in accordance with the mixture ratio; for example, 5% bio-diesel will result in a 5% incentive. Environmental Protection Minister Gilad Erdan said later phases of the program would provide incentives for green building, energy efficiency and heavy vehicles.