State revenues from taxes on vehicles and fuel totaled nearly NIS 30 billion in 2018, according to initial figures in the State Revenues Report for 2017-2018 released by the chief economist in the Ministry of Finance yesterday. The report shows that taxes on fuels yielded NIS 19.1 billion, and purchase taxes on vehicles yielded NIS 10.5 billion. Purchase taxes on tobacco and alcohol yielded NIS 7.1 billion.
The sum of NIS 30 billion does not include VAT, license fees, and income tax on the imputed value of private use of company cars, which altogether amount to approximately NIS 10 billion more.
In 2018, purchase tax was abolished on mobile telephones and electronic products, cutting an estimated NIS 425 million from state revenues last year.
In comparison with 2017, after discounting for inflation, state revenues from purchase taxes grew 1.9% last year. Excluding fuels, the rise was 7.2%.
The main cause of the rise actually came in 2016: an announced purchase tax hike led to a surge in purchases of vehicles towards the end of that year to beat the hike, thus transferring NIS 1.8 billion of tax revenues from 2017 to 2016. A similar phenomenon can be expected this year: the rise in purchase tax rates on hybrid vehicles will lead to purchases of such vehicles being brought forward.
Cigarettes were the state's main source of purchase tax revenue after vehicles and fuels. In 2018, taxation of cigarettes yielded NIS 5.158 billion, while sales of other tobacco products yielded just NIS 397 million. Tax collection on tobacco products other than cigarettes is expected rise this year following the ruling by the High Court of Justice that taxation of rolling tobacco should be made equal to taxation of cigarettes. Purchase tax collection on alcoholic beverages in 2018 totaled NIS 660 million.
