The Smart Marty Sky Dispatch
Tax Authority proposes flight tax to cover environmental costs
The proposed tax would reach approximately NIS 100,000 for a large aircraft on a long-haul flight. What it means for consumers: An additional NIS 274 per ticket to the US or Far East.
The Tax Authority in Israel published a position paper ahead of the upcoming state budget proposing a tax on departing flights from Israel. The plan aims to raise about NIS 1.1 billion annually based on 2025 price levels.
The proposal would tax each departing aircraft according to its weight category and the distance of the flight, rather than per passenger or by altering fuel duties. The concept was selected for its operational simplicity and the certainty it offers airlines.
For short flights up to 500 kilometers, the tax per passenger would be about NIS 12, with light aircraft starting at about NIS 1,300 per flight. For short-to-medium-haul routes to Europe and the Gulf, the tax per passenger is around NIS 58, translating to roughly NIS 4,452 to NIS 16,943 per aircraft depending on weight. Long-haul flights to the US and East Asia would see about NIS 274 per passenger, with a broad range up to roughly NIS 100,000 per aircraft for the largest planes over 300 tons.
An analysis indicates the tax would add about 4% to 5% to a consumer’s ticket price. For reference, the proposed scheme would yield approximately NIS 56–NIS 73 for a London or Paris flight and about NIS 223–NIS 262 for a New York flight in economy class.
The burden of the tax is projected to fall unevenly: about 25% on foreign residents, with roughly another 25% borne by passengers from the top income decile and about 25% by deciles 8–9. The remaining 2% to 6% of the total burden would be borne by the lower deciles.
The Tax Authority notes that the measure aligns with a global trend, citing that Britain, France, Germany, the Netherlands, and Denmark already apply similar taxes on departing flights to address climate and environmental costs.