Israel declares "revolution" against gas guzzlers

By Allyn Fisher-Ilan

JERUSALEM (Reuters) - Israel declared a "green tax revolution" on Monday, proposing a new customs levy on large vehicles and a rebate for junking older gas-guzzling models.

Israeli Finance Minister Yuval Steinitz said he hoped his plan would persuade Israelis to switch to hybrid cars while earning the state up to 400 million shekels ($100 million) a year.

"We are introducing a green tax revolution," Steinitz said.

The plan would be implemented over the next decade and must first be approved by parliament's finance committee, which was likely to do so in the coming weeks, Environmental Affairs Minister Gilad Erdan told reporters, alongside Steinitz.

Israel's conflict with Palestinians has long overshadowed environmental concerns. But high levels of carbon emissions from a growing fleet of private and commercial vehicles has begun to eat into the country's gross domestic product, Erdan said.

He said up to 2 percent of Israel's GDP of 714 billion shekels in 2008 was lost to the costs of automobile pollution, including illness, damage to buildings and other infrastructure.

Due to the recession, Israel is expected to post a budget deficit of 6 percent of GDP in 2009.

The government's plan to cut state spending was rejected by labor unions so new ways to increase revenues are being sought to keep the deficit under control.

The government has already raised fuel taxes and increased the value added tax (VAT) to 16.5 percent from 15.5.

Critics said the new tax plan, which would raise the base tax on new vehicles from 75 percent to 92 percent, then offer discounts for cars with better gas emissions standards, may actually increase the prices of many smaller cars.

Steinitz said purchase taxes would be slashed to just 30 percent for hybrid vehicles, and that the bulk of most tax increases would be borne by purchasers of larger, luxury automobiles or SUVs.

Erdan said the policy also meant to educate the Israeli public "to get used to opting for consumer items that do less damage to the environment."

The government would also try to encourage Israelis to get rid of thousands of older vehicles clogging the roads -- about 70,000 are at about 20 years and older -- by paying 3,000 shekels ($750 shekels) apiece to junk them, Erdan said.

(Additional reporting by Steven Scheer; Editing by David Cowell)

© Thomson Reuters 2009 All rights reserved

Massachusetts Considering a 'Hummer Tax'

Patrick considers higher fees for gas guzzlers

By Noah Bierman, Globe Staff

Governor Deval Patrick said today he is looking at a Hummer tax -- adding higher registration fees for gas-guzzling cars and offering discounts for those that do less harm to the environment. One industry opponent said it would be the first such fee in the nation on the state level.

The suggestion comes as Patrick prepares to unveil a fuller version of his much-awaited transportation plan on Friday. While he would not release details today, Patrick said at a Greater Boston Chamber of Commerce appearance that any gas tax increase would be coupled with a freeze on toll rates.

Environmentalists applauded the registration proposal, saying it would encourage people to buy smaller and more fuel-efficient cars, which are increasingly seen as key to curbing global warming. Similar proposals have been proposed in Massachusetts since at least 2001, but without the prominent backing of a sitting governor.

“The social costs of larger vehicles include not only the additional pollution, but also higher crash risks to other vehicles,” said Representative William Brownsberger, a Belmont Democrat who is cosponsoring two bills in the Legislature that would penalize expensive and heavy cars with higher taxes or fees.

But opponents say such fees could penalize families and small businesses who need big cars or trucks and already pay higher fuel prices. And at least one influential player in the transportation debate worries that adding an environmental component to the debate could complicate it, and ultimately delay important plans to fix the state’s broken road and public transit system.

“There’s painful steps that need to be taken to fix our transportation system," said Stephen J. Silveira, a lobbyist who chaired the Massachusetts Transportation Finance Commission. "Once you bring the environmental aspect into them, you add a whole other layer of debate which makes this harder to get to at the end of the day. And this is hard enough.”

Patrick said today that his administration is looking at the Registry of Motor Vehicles fee structure to create "differential fees based on the efficiency of the vehicle or the emissions of the vehicle."

"Big gas guzzlers will pay more for their registration," he added. "Plug-in hybrids would pay less and you’d have a range, that kind of thing."

Patrick's office declined to elaborate on the proposal or say whether it would appear as part of his overall transportation plan. RMV spokeswoman Ann Dufresne said state transportation officials have been discussing a gas guzzler fee program, "but I think they’re still trying to flesh that out now.”

Patrick said today that he was continuing to look at raising the state gas tax, but did not commit to it. When asked about it during the Chamber event, he threw the question back to the audience, asking by a show of hands whether the crowd favored a gas tax increase or a toll hike. The crowd chose the gas tax, which has generally been a more popular proposal in the business community.

But Patrick cautioned that even if lawmakers raise the gas tax rate, the state would probably collect less money in the future as drivers buy more fuel-efficient cars and need less gas. Because of that, he is also considering a replacement that would charge drivers a fee for every mile they drive.

That's another reason environmentalists support the Hummer tax. If the gas tax is eventually phased out, a new fee would keep the pressure on consumers to buy more fuel-efficient cars.

“It allows for technology to evolve every year because it's always taxing the most polluting and it's always incentivizing the most efficient,” said Matt Elliott, a clean energy advocate for Environment New Jersey, where the idea is also being debated.

The federal government already has a gas guzzler tax on new cars, passed in 1978. But sport utility vehicles and trucks are exempt, so it affects mostly high-performance luxury vehicles such as Aston Martins and Lamborghinis that have high costs and very poor mileage. Any car that gets more than 22.5 miles per gallon -- the vast majority of sedans and coupes -- is exempt.

A state fee on gas guzzlers that includes SUVs and gives rebates to drivers of plug-in and other high mileage cars has been proposed in other states, including California, but has yet to pass, according to Charles Territo, spokesman for the Alliance of Automobile Manufacturers, which represent 11 car companies, including the big three American carmakers. Territo warns of unintended consequences on families and small businesses and points out that low-mileage cars are already priced below big cars in most cases.

“Consumers that have these vehicles already pay more," said Territo, who said his group would oppose such a plan in Massachusetts.