Israel Delays Purchase Tax Hike on Electric Cars Due to Elections
Translated & summarized from Globes by baba
Israel has postponed a planned increase in the purchase tax on electric vehicles, which was set to take effect in January 2027. The delay, attributed to the upcoming election period, will allow the current 48% tax rate with a NIS 22,000 credit to continue for several months. This move provides flexibility for importers and allows the government to finalize its updated "Green Taxation" plan, while the future of a gasoline tax reduction remains uncertain.
The story in 5 lines · by baba
- Israel's purchase tax on electric cars will be delayed past January 2027 due to elections.
- The current 48% tax rate with a NIS 22,000 credit will be extended.
- The tax hike to 83% would have significantly increased electric vehicle prices.
- The delay allows importers flexibility and the government to update tax plans.
- A separate gasoline tax reduction expiring in November faces an uncertain future.
Israel's purchase tax on electric vehicles, originally set to increase in January 2027, will be postponed for several months due to its proximity to election periods. The current tax stands at 48%, with a NIS 22,000 tax credit, representing a significant benefit compared to other vehicle types. This tax benefit was established as a temporary measure and has been extended multiple times. Without renewal, the purchase tax was slated to jump to 83%, significantly raising the prices of most imported electric models.
The Ministry of Finance decided to extend the existing order beyond January, citing a clause in the Basic Law: Knesset that allows for automatic extensions of legislation due to expire during or near election periods. This prevents laws from lapsing during transitional government phases. The extension applies to legislation set to expire in the final two months of a Knesset's term or the first three months of a new one.
Many importers had already placed substantial orders, particularly from China, to capitalize on the planned tax increase. The extension provides importers with flexibility in releasing these vehicles from customs after January and allows for the launch of new models at lower prices than initially anticipated in early 2027. The delay also gives the Ministry of Finance time to finalize its updated "Green Taxation" plan for vehicles.
Industry sources suggest the Ministry aims to reintroduce a mileage tax on electric and plug-in hybrid vehicles, potentially at 15 agorot per kilometer, as originally proposed for 2024 but frozen last year. Alongside this, a gradual increase of the electric vehicle purchase tax to 83% over several years is being considered. Separately, the future of a NIS 1 reduction in gasoline excise tax, set to expire in early November, remains uncertain, with the Finance Minister expected to decide on its extension after reviewing energy market conditions.
