Israel Considers New Flight Tax to Fund Environmental Mitigation

If implemented, the tax is expected to increase average flight ticket prices by 4% to 5%. This would translate to an additional cost of about 12 shekels per passenger for domestic flights, 58 shekels for medium-haul flights primarily to Europe, and up to 274 shekels for long-haul flights to destinations like the United States and East Asia. The tax on departing aircraft would range from 1,300 shekels for light aircraft on domestic routes to up to 100,000 shekels for heavy aircraft on long-haul routes.

The Tax Authority justified the proposal by noting that Israel's aviation sector is currently lightly taxed compared to other industries, with international flights subject to zero VAT and jet fuel exempt from excise taxes. Similar flight taxes have already been implemented in several Western countries, including the United Kingdom, France, Germany, the Netherlands, and Denmark. According to the authority, foreign residents and high-income Israelis would bear the majority of the tax burden.

Airline companies, including Air Haifa, have expressed opposition to the proposed measure, raising concerns about the financial burden on passengers and potential double taxation. The proposal emerges alongside other developments in the Israeli aviation sector, including Israir considering the acquisition of Arkia, and concerns that the conflict with Iran could further inflate summer flight prices.