Economic problems and 'security disturbances' have not put Israelis off spending $US1.25 billion on new cars so far this year. $US120 million of new cars purred out showroom doors in November alone, a rise of 29% compared with 1999. Car imports also increased by 16% in November and by 33% for the 11 months of the year so far.

Economic experts say that the weakness of the euro and appreciation of the shekel against the dollar and other currencies help explain the rise.

However, personal imports have just taken a big hit from the government. The Knesset Finance Committee yesterday (4/12/00) approved new regulations that state that duties and purchase taxes must be based on the vehicles' official list price on their purchase receipts, on condition that it is not more than 5% under the consumer list price abroad, excluding taxes in the country of manufacture, but including import costs.

Depreciation will be deducted for used cars from the list price, based on the number of months since the car was put on the road until the date of import.

The amendment is intended to affect the value calculation of imported vehicles for tax purposes, which will now be worked out according to the official list price. Until now, a vehicle's value was calculated according to its pre-tax price, paid by the importers FOB, plus a percentage addition.

A rise of tens of thousands of shekels in the duties imposed on personally imported vehicles is expected, in particular for luxury cars with high profit margins.

Personal importers of luxury cars complained in the past that manufacturers' prices should not be relied upon because they represent relationships and quantity discounts of many years standing between the importers and manufacturers.

In recent months, there has been a major increase in the personal import of luxury cars, especially the Mercedes Benz S-class and BMW's 7-series.