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The BMW logo seen at its German headquarters. Photo by AP
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BMWs, seen here in a China showroom, are flashy and certainly not frugal. Photo by AP

The public pressure has paid off. The posh BMW 528, one of two automobile models selected to serve as company cars for government ministers, will not be seen burning up its tires on the steep ascent to Jerusalem anytime soon.

According to a poll by Markerweek, the ministers were worried about being seen excitedly tearing the nylon covers off of their new cars at a time when the public is wincing from painful budget cuts, including an increase in VAT and cuts in public services.

In a tender held by the car management department at the treasury, the BMW 528 and Citroen C5 Exclusive models were chosen as the exclusive modes of transport for 50 ministers and government officials for the next two years. But a Markerweek survey conducted at the Knesset last week showed that the ministers are very concerned about a public backlash. So despite the fact that BMW is perfectly legit, nearly all of the ministers told us they plan to dial down the horsepower and buckle up in the more budget-friendly Citroen.

Meanwhile, amid the uproar, Finance Minister Yuval Steinitz has ordered the CEO of his office to see if it is possible to cancel the tender and replace it with a new one, as well as impose a price limit that would place luxury cars firmly out of the running.

There are doubts, however, that the tender can legally be canceled at this point.
Ministers were quick to criticize the tender. One of them, speaking off the record, said, "This is a scandal. The Ministry of Finance held a tender for luxury vehicles rather than tightening their belts and allowing more modest models to compete." Continuing, the minister added, "In an era of social protests and public funding cuts, it is senseless to provide ministers with luxury cars worth NIS 400,000."

Opposition Leader Shelly Yacimovich called the move a prime example of government inadequacies. “The decision to choose the most expensive car in the tender reflects the government’s extravagance and lack of shame,” she said. "This is a flashy car that is just inappropriate for a public servant, and it is further proof of just how much the government is disconnected from the public. At a time when for young couples the idea of purchasing a flat is a mere fantasy, when their wages are eroding and the cost of living is soaring, it wouldn’t hurt the ministers to show a little modesty."

Minister for Improvement of Government Services Michael Eitan (Likud) said, “At a time of budgetary cuts and an increasing deficit, such a luxury vehicle could signal a total loss of perspective. Families that need to cut costs on education, health and welfare do not purchase luxury vehicles. Our leaders should act as an example in these cases.”

The motives of the abstaining ministers, however, are not completely selfless. Some of Israel's elected officials admitted that they were passing on the BMW in order to avoid the sky-high taxes that would come with it. Ministers using the BMW would pay taxes as high as NIS 4,500 per month, compared to costs of NIS 2,500 per month if they opted for the Citroen instead.

‘Celebrity’ discounts for ministers

Sources in the Knesset also criticized the fact that the tender was closed after the prices of the winning vehicles were drastically slashed. Delek Motors, Israel's BMW importers, gave the state a sweetheart deal of 48 percent off – making the final sticker price NIS 207,000 rather than NIS 398,000. On the Citroen, the state received a discount of 13 percent – NIS 178,000 instead of NIS 205,000.
“It is an outrage that the treasury works to effectively get a ‘celebrity’ discount for supplying vehicles to ministers,” said one source in the Knesset. "Even though the state is indeed trying to purchase lower-priced vehicles at tender, there is also the question of the public’s perception. Any importer would be happy to give discounts to the state on the condition that its ministers would use their cars."

The Finance Ministry said that it considers equality, free market competition and economic efficiency when formulating all of its tenders, but added that in this particular instance, public opinion was also taken into account before a final decision was made.