Israel Tax Authority Proposes New Departure Flight Tax Up to NIS 274
Israel's Tax Authority has recommended a new departure tax on flights, adding up to NIS 274 per passenger to internalize environmental and health costs. The levy aims to generate NIS 1.1 billion annually.
Israel's Tax Authority has recommended introducing a new tax on departing flights, which could add up to NIS 274 to ticket costs per passenger. According to a position paper published on Sunday by the Tax Authority and formulated by its Planning and Economics Division, the proposed levy is expected to generate approximately NIS 1.1 billion annually for the state budget, based on 2025 pricing. Currently, this remains a recommendation as part of discussions surrounding upcoming state budgets.
Under the proposed model, the tax would be levied per departing aircraft based on weight category and flight distance rather than actual passenger count. Proposed amounts range from roughly NIS 1,300 for domestic flights on aircraft weighing under 50 tons, to about NIS 100,000 for long-haul flights on aircraft exceeding 300 tons. For passengers, the authority estimates this translates to an additional cost of approximately NIS 12 for domestic flights, NIS 58 for medium-haul flights primarily to European destinations, and NIS 274 for long-haul routes to destinations such as the United States and East Asia. The authority projects the tax will account for 4% to 5% of the consumer ticket price.
The Tax Authority explains that the initiative aims to make the aviation sector bear some of the environmental and health costs it generates. Flights contribute to global warming, while air and noise pollution from takeoffs and landings necessitate additional investments in the healthcare system and noise-insulated construction. The position paper notes that while automotive and industrial sectors internalize environmental costs through taxation, aviation remains largely untaxed outside of direct fees, partly because international flights carry a zero VAT rate and jet fuel is exempt from excise duty.
International Precedents and Evaluation
The Tax Authority reviewed existing international mechanisms for reducing aviation emissions, where airlines exceeding emission thresholds must purchase carbon offsets. However, the authority concluded these mechanisms are insufficiently strict. Consequently, Western nations including the United Kingdom, France, and Germany have instituted departure taxes to ensure ticket prices reflect environmental impacts.
Evaluating alternatives such as passenger-based levies, distance-based taxes, and jet fuel taxes, the Tax Authority ultimately recommended a tax based on aircraft weight and flight distance. This approach was chosen for its operational simplicity and predictability for airlines, independent of passenger load factors.
