Photo: Ralf Roletschek / Wikimedia Commons
Israel’s Tax Authority has recommended introducing a tax on every aircraft departing the country, a proposal that would add roughly NIS 1.1 billion a year to state revenues and raise the cost of air travel, according to a position paper released Sunday.
The paper, prepared by the authority’s planning and economics division ahead of deliberations on the next state budget, lays out a levy calculated per departing aircraft based on its weight category and flight distance.
What travelers would pay
Translated into per-passenger terms, the recommended charge would come to about NIS 12 on domestic flights, roughly NIS 58 on short and medium-haul routes such as Europe and the Gulf, and around NIS 274 on long-haul flights to the United States and East Asia. On a per-aircraft basis, the levy ranges from about NIS 1,300 for a light plane on a domestic route to roughly NIS 100,000 for the largest long-haul wide-bodies weighing over 300 tons.
The authority estimates the charge would add an average of 4 to 5 percent to ticket prices, based on historical fares: roughly NIS 56 to NIS 73 on flights to London or Paris, and about NIS 223 to NIS 262 on economy tickets to New York.
Why now
The position paper argues that aviation is one of the only sectors that pays almost nothing for its negative externalities, including global warming emissions, local air pollution and noise. International flights are zero-rated for value-added tax, and jet fuel is exempt from excise duty.
The authority notes that similar mechanisms already operate in Britain, France, Germany, the Netherlands and Denmark, and it chose the aircraft-weight model for its operational simplicity and the certainty it gives airlines.
On the distributional side, the full Tax Authority position paper estimates that about a quarter of the total tax burden would fall on foreign residents, about a quarter on the top income decile and about a quarter on the eighth and ninth deciles together. The remaining income deciles would each bear between 2 and 6 percent of the total. These are shares of the total tax burden, not percentages of only the Israeli-resident portion.
The recommendation was drafted as part of preparations for the 2027 budget law. Whether it advances will depend on the finance minister and the government.
JBizNews Desk | Jerusalem
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