Israel Tax Authority Proposes New Flight Tax
Translated & summarized from Globes by baba
Israel's Tax Authority is proposing a new tax on departing flights, with potential charges up to NIS 100,000 per flight based on weight and distance. The tax aims to address the environmental impact of aviation and is expected to generate NIS 1.1 billion annually. This initiative follows similar measures in some Western countries and is being considered for the 2027 state budget.
The story in 5 lines · by baba
- Israel's Tax Authority proposes taxing departing flights up to NIS 100,000 per flight.
- The tax is based on aircraft weight and flight distance, aiming to address environmental costs.
- The proposed tax could add NIS 12 to NIS 274 per passenger, depending on flight length.
- The initiative is expected to generate approximately NIS 1.1 billion annually for the state.
- Several Western countries have already implemented similar taxes on outbound flights.
Israel's Tax Authority is considering a new tax on flights departing the country, with proposals ranging up to NIS 100,000 per flight, depending on aircraft weight and flight distance. The proposed tax, intended for inclusion in the 2027 state budget, would range from approximately NIS 1,300 for a domestic flight by a light aircraft to NIS 100,000 for a long-haul flight by a heavy aircraft. This initiative stems from discussions during the previous budget cycle and is detailed in a position paper outlining various taxation options for outbound flights.
The Tax Authority's preferred method involves taxing each departing aircraft based on its weight and the flight's distance. This approach is estimated to add about NIS 12 per passenger on domestic flights, NIS 58 on medium-haul flights (primarily to Europe), and NIS 274 on long-haul flights to destinations like the US and East Asia. The authority projects that this tax would represent 4-5% of the ticket price for consumers and generate approximately NIS 1.1 billion annually for the state, based on 2025 prices.
The rationale behind the proposed tax is to address the significant contribution of air travel to global warming and local air pollution, as well as noise pollution. Israel invests resources in mitigating climate change and its effects, and the local environmental impacts of flights necessitate further investment in healthcare and noise-protective infrastructure. Unlike sectors such as automotive or industry, the Israeli tax system currently does not account for the external costs imposed by aviation, partly because international flights are exempt from VAT and aviation fuel is tax-exempt.
While an international mechanism exists to reduce aviation emissions by requiring airlines to purchase offsets for exceeding certain pollution thresholds, the Tax Authority deems it insufficient. Consequently, several Western countries, including England, France, and Germany, have opted to tax outbound flights to ensure their environmental impact is reflected in ticket prices. The position paper examined alternatives like a per-passenger tax or a tax on aviation fuel, but the weight-and-distance model was chosen for its operational simplicity and predictability for airlines, irrespective of passenger numbers.
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