Avoid Rush Hour and Get Paid by the State

Private transportation generates a windfall in tax money: NIS 27.8 billion a year, about 10% of government revenues. This includes NIS 12.3 billion for cars themselves – purchase tax, customs, and annual licensing – and NIS 15.4 billion on assorted fuel taxes. These taxes are, in a sense, regressive, in that residents of outlying areas invariably have longer distances to travel and therefore pay more.

• Competition drives down cost of car repairs in Israel
• Time for an Egged boycott
• New rule lets car buyers pit importers against leasing firms
• Israeli drivers getting up to speed

But road congestion and pollution remain a problem, and the Finance and Transportation ministries are looking for ways to convert the tax structure from one based on ownership to one based on how far drivers travel and when.

Lowering the purchase tax is seen as a way to encourage drivers to buy newer, less-polluting and safer vehicles. Meanwhile, taxing car usage based on where drivers travel and at which hours of the day would presumably alleviate traffic jams by encouraging drivers to use public transportation and avoid rush hour.

About a month ago, the state launched a two-year experiment called "Na'im Leyarok" (Going Green) with the intention of recruiting 1,200 volunteers to outfit their cars with GPS tracking devices and have their travel centrally monitored. Besides receiving a NIS 1,000 participation grant, each participant will be given a monthly stipend for driving in congested areas during peak hours. (For the first six months, driving habits will be monitored without the monetary incentives; the monthly budgets will be allotted at the end of the six-month period.)

Driving in Tel Aviv, Jerusalem, Haifa and their suburbs during rush hour – 6:30-9:30 A.M. and 3:30-6:30 P.M. from Sunday to Thursday – will cost participants about NIS 1.50 per kilometer. From 9:30 A.M. to 3:30 P.M. and 6:30 P.M. to 8 P.M., the rate will go down to just NIS 0.10 per kilometer.

Pollution will also be taken into account, based on engine size. Car engines smaller than 1,500 cubic centimeters will be assessed NIS 0.10 less per kilometer, while cars with engines over 1,800cc will pay NIS 0.10 more.

In any case, no more than NIS 25 will be budgeted for any individual trip. Drivers won't actually be asked to pay if they exceed their budgets, but they will be entitled to pocket any savings – up to NIS 250 a month.

The government-owned company Hoze Israel, which is running the program, says it expects participants to alter their commuting habits in order to stay within their budgets by switching to public transportation, working from home, and going into work an hour later.

One key factor limiting drivers' options is employers who require staff to punch in at a specified time. Hoze Israel says it is hoping to see employers show more flexibility by, for example, allowing employees to work from home at the beginning of the day when roads are congested.

It takes just a small excess of cars on the road to create a jam, traffic experts say. If, for example, a highway is built to handle 10,000 vehicles an hour, a mere extra 100 cars will be enough to cause a traffic jam. A 15% reduction in the number of cars is enough to significantly lower the number of back-ups, according to traffic experts.

One major concern regarding the implementation of such a system on a larger scale is the possible intrusion of privacy. While the volunteers of this particular program have consented to be monitored, the public at large might not be so agreeable. Talks are therefore under way about introducing a new device that would generate an invoice, much like a taxi meter, without relaying specific data about the car's location.