Tax officials propose new levy on those traveling abroad

Flying abroad could become even more costly as the Israel Tax Authority proposes a new levy on all departing flights from Tel Aviv’s Ben Gurion Airport.

The comprehensive position paper by the Israel Tax Authority’s planning and economics division recommends a new tax levied per aircraft based on weight and flight distance. The proposal was formulated in preparation for upcoming discussions of the 2027 state budget.

While the tax would be levied directly on airlines, it is expected to trickle down straight to travelers’ fares.

Tax charges would range from about NIS 1,300 ($408) per flight for a small aircraft weighing up to 50 tons on a domestic flight, to up to about NIS 100,000 ($31,388) per flight for a large aircraft weighing over 300 tons on a long-haul flight.

Under the proposed model, the tax would translate into an additional cost of about NIS 12 ($3.77) per passenger on a domestic flight, NIS 58 (18.21) per passenger on a medium-haul flight primarily to destinations in Europe, and NIS 274 ($86) per passenger on a long-haul flight to the US and East Asia.

According to the tax authority’s model, the added amounts translate to roughly 4% to 5% of an average ticket price.

The proposed air travel levy, if adopted, could generate NIS 1.1 billion ($345 million) in annual tax revenues, according to estimates by the tax authority.

Aviation accounts for roughly 4% of Israel’s greenhouse gas emissions, yet unlike most economic sectors, it largely escapes taxation for its environmental footprint, the tax authority argues. Jet fuel is entirely exempt from excise tax levied on fuels, and international flights carry a 0% VAT rate.