The original protest organized by Israel's community of motorcycle riders - riding around the country in their underpants - proved to be one of the most effective in the history of protests in Israel. (The argument was that they couldn't afford coverage for both their bikes and bodies because insurance on motorcycles is so expensive.) Knesset members were deeply impressed by the bared-back riders and managed to persuade the commissioner of insurance's plan to raise mandatory insurance rates for bikers, at least for the time being. Since then all the parties involved, namely representatives of the riders, the Knesset and the Finance Ministry, have been talking intensively in the hope of reaching a compromise.
The low level of the riders' underwear pales compared with the lowness of the debate. Certainly it's fallen below the naked facts.
First and foremost, two key facts that make clear the need to raise compulsory insurance rates on motorcycles have been forgotten by the wayside. The first is that from 2005, insurance on motorcycles has been running a chronic deficit of NIS 200 million a year. That means the money collected from Israel's riders each year is about NIS 200 million less than the amount of insurance payouts to bikers after accidents.
How is that deficit covered? By Israel's drivers of four-wheeled vehicles. According to the Finance Ministry, these other drivers each pay an average of NIS 80 a year through their own compulsory insurance rates just to cover the loss from the bikers. That is called a cross-subsidy.
In short, if you drive a car, you're subsidizing Israel's biking community.
During the Knesset debate about raising insurance rates on motorcycles, the riders' representatives argued that the cross-subsidy is fair. Their argument boils down to compulsory insurance being a kind of social-security benefit to ensure that anybody injured in a traffic accident - motorcycle rider, car driver or pedestrian - is covered by insurance, regardless of his responsibility for the accident. Based on that view, the bikers argue, it's right that others should subsidize them, whether "others" are other drivers or the insurance companies, because their bikes are cheaper than cars and are most common among the less wealthy.
The bikers also pointed out that by riding bikes rather than driving cars they contribute to society in other ways by reducing traffic congestion and air pollution.
To be accurate, scooters may cost less than cars but the big motorcycles driven by the better-heeled often do not. And insurance was never meant to be a kind of social-rights tool.
Moreover, while motorcycles may reduce traffic congestion and smog, they constitute only 4% of the vehicles on Israel's roads while playing a part in 13% of the fatal accidents.
Here comes the second fact that has been ignored in the unlearned debate on motorcycle insurance. Motorcycles in Israel already are subsidized by the state, and to no small degree. It's just that the subsidy isn't provided through insurance rates, which are supposed to reflect risk, not an entitlement to social benefits. It's provided through the usual way the state confers benefits: taxation.
Two-wheeled vehicles, most notably the low-cost scooters, receive tax breaks where cars do not. For instance, the annual licensing fee for a car ranges from NIS 800 to NIS 4,000. The annual licensing fee for a motorcycle ranges from NIS 50 to NIS 300. The most common two-wheeled vehicle, the 125-cc scooter, costs NIS 150 a year to license. The cost for even the smallest, cheapest car is far higher.
Sales tax on two-wheeled vehicles ranges from 40% of the price, in the case of scooters, to 72% on the biggest motorcycles. Sales tax on cars is 60% for "ecologically aware" cars to 90%. Again, since the vast majority of two-wheeled vehicles in Israel are scooters, the sales tax that most bikers pay is less than half the tax on cars.
Bikers receive preferential tax treatment at other levels too: VAT (recognition of costs) and value of use.
The Lady Godiva-style ride through the city streets may have been colorful and amusing but it can't cover the fact that Israel's bikers are far from deprived. If anything, they have received preferential treatment compared with Israel's drivers.
There is no justification for their demand that the subsidies they receive be expanded to insurance as well. Instead, their representatives should reach an agreement with the Finance Ministry on, for instance, substituting some of their compulsory insurance with participation in the event of claims. If they agree to participation of up to NIS 30,000, they could get a discount of up to 25% from their mandatory insurance rate. They should settle for that.
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