In recent days, Israel’s Finance Ministry has again been discussing two recurring transport taxes, congestion pricing and a road-use tax on electric vehicles. Both ideas have surfaced repeatedly over the years, including draft language in 2022 and again in 2024, but neither made it into the final budget framework. Whether they will advance this time is still unclear.
The article argues that even the possibility of a per-kilometer charge is already hurting the market. Industry sources say the repeated uncertainty is depressing electric vehicle sales, because buyers do not know whether purchase taxes will soon fall, only to be replaced by a new mileage tax. The uncertainty also affects plug-in hybrids, which may be included as well.
The current tax gap is significant. Petrol cars face 83% purchase tax, while electric cars are taxed at 52%. The ministry’s logic is that drivers who travel more create congestion and also avoid fuel excise, so they should pay more. But the article says this would damage the used-EV market, since lower new-car prices and a future mileage charge could sharply reduce resale values and erase the main financial advantage of buying electric.
A further problem is pricing transparency. With the exception of Tesla, Israeli importers do not disclose how much of a car’s price is actually tax, making it hard for consumers to know whether any tax cut is truly passed on. The article also warns that fleet and leasing markets would be hit hard, since many drivers there travel a lot and companies could be left absorbing large losses if official prices drop. For now, the piece concludes, the ongoing debate is enough to keep buyers waiting, and some may delay purchases rather than risk paying full price before a possible tax change.
