Israel Proposes New Tax on Flights to Curb Emissions
Translated & summarized from Ice by baba
The tax, based on aircraft weight and flight distance, is expected to increase average ticket prices by 4-5%. It aims to align Israel with international trends and encourage the aviation sector to internalize its environmental costs.
The story in 6 lines · by baba
- Israel's Tax Authority proposes a new tax on outbound flights to address environmental costs.
- The proposed tax could generate approximately 1.1 billion shekels annually for the state.
- Average flight ticket prices are estimated to increase by 4% to 5% if the tax is implemented.
- The tax would be based on aircraft weight and flight distance, with varying costs per passenger.
- Many Western countries have already introduced similar taxes on flights.
- The proposal aims to reduce greenhouse gas emissions from the aviation sector.
The proposal, detailed in a position paper by Dr. Uri Grufel and Nili Ben-Tovim, aims to reduce greenhouse gas emissions and reflect the external environmental costs of air travel. If implemented, the tax is estimated to generate approximately 1.1 billion shekels annually for the state.
Globally, aviation accounts for about 4% of climate change, a figure similar to Israel's aviation sector's contribution to national greenhouse gas emissions. Unlike other sectors such as industry, energy production, and land transportation, aviation is not currently taxed for these negative impacts. Flights are exempt from fuel excise tax and VAT because they are considered consumption outside national borders, with only airport authority fees currently levied.
The international CORSIA agreement offers only a partial solution, addressing emissions above 2019 levels with significantly lower pricing than environmental agencies in Israel and the US typically use. Consequently, many Western countries, including the UK, France, and Germany, have introduced their own flight taxes, often based on flight distance and seating class.
The Tax Authority's recommended approach involves taxing each outbound aircraft based on its weight and flight distance. This method is considered the simplest to implement, with the tax amount known in advance to airlines.
Estimated costs per passenger vary: domestic flights (under 500 km) would incur about 12 shekels (36 for luxury classes), short-to-medium haul flights (500-4,000 km) around 58 shekels (174 for luxury classes), and long-haul flights (over 4,000 km) approximately 274 shekels (822 for luxury classes). The overall impact is expected to increase average ticket prices by 4% to 5%.
Revenue from this tax is projected at 1.1 billion shekels annually, based on 2023 data and 2025 prices. The tax burden is expected to fall on foreign citizens (25%), the top income decile (25%), and the 8th and 9th deciles (25%), with lower deciles bearing a reduced burden of 2%-6%. Most passengers (86%) would pay the lower rates for domestic and medium-haul flights. Private flights, with significantly higher per-passenger emissions, would also be taxed, calculated as if carrying 100 passengers. The proposal focuses solely on climate change impacts, excluding additional costs like noise pollution, which could add an estimated 100 million shekels.