Currently, the new cars exported from Israel are for the wealthy Gazans, but importing used vehicles would appeal to the Strip’s middle class.

The Israel Defense Forces’ Coordinator of Government Activities in the Territories is due to approve the export of used Israeli cars to the Gaza Strip, TheMarker has learned. Israel already allows the import of new cars into the territory.

Palestinian children play in a damaged car outside a U.N. school in Gaza City, Sept. 3, 2014. – Photo: AP

Following the easing of some other aspects of its blockade on the Hamas-run Gaza Strip, officials at COGAT have decided to allow the import into Gaza of used cars, in the hope it will aid Gaza’s economy and create jobs for workers who would be involved in servicing the cars.

Consultations have been held in recent weeks with officials from the Transportation Ministry and Israel Police.

The new cars that are imported into Gaza from Israel are brought at full price, including taxes. It is Gaza’s wealthy who buy these cars, but the import of used vehicles is expected to appeal to middle-class Gazans.

The import of used cars from Israel to Gaza could be scuttled, however, if either the Palestinian Authority or Hamas stand in the way of the effort. The Palestinian Authority does not permit the export of most used cars from Israel into the West Bank, because it seeks its share of taxes on the sale of vehicles there.

If a car loses half its value after five years, for example, the tax on the sale of the vehicle is also cut in half. The PA has sought to tax the remaining value on used cars sold in the West Bank, but Israel has refused. As a result, exports are limited to vehicles on which tax was not paid when they were new.

The supply of cars in Gaza currently consists of older used cars and vehicles that, until recently, were smuggled through tunnels under the border with Egypt. The current Egyptian government, however, has cracked down on smuggling activities.

It is expected that the transfer of used Israeli cars will be carried out by agents who will buy them from Israeli owners and transfer them to Gaza. It is anticipated that the cars will be more than three years old.

View original HAARETZ publication at: http://www.haaretz.com/business/1.629159