The proposed levy would tax departing aircraft according to their weight and flight distance, potentially increasing passenger fares by 4% to 5% and generating an estimated ILS 1.1 billion in annual government revenue.
The Israel Tax Authority has proposed introducing a new tax on aircraft departing from Israel as part of preparations for discussions on the 2027 state budget.
The proposal, outlined in a position paper published by the authority’s planning and economics division on 8 November 2026, aims to make the aviation sector contribute more towards the environmental costs of air travel.
Under the proposed system, airlines would pay tax on each departing flight based on the aircraft’s weight and the distance travelled. Although airlines would be responsible for paying the levy, the authority expects them to pass the additional costs on to passengers through higher ticket prices.
Proposed tax rates and passenger costs
The proposed tax would range from ILS 1,300 per flight for aircraft weighing up to 50 tonnes on domestic routes to ILS 100,000 for aircraft weighing more than 300 tonnes on long-haul routes.
According to the Tax Authority’s estimates, the additional cost per passenger would be approximately:
- Domestic flights: NIS 12 per passenger.
- Medium-haul flights: NIS 58 per passenger, mainly for destinations in Europe.
- Long-haul flights: NIS 274 per passenger, mainly for destinations in the US and East Asia.
Environmental rationale and taxation gaps
The Tax Authority argues that aviation contributes to greenhouse gas emissions, local air pollution and aircraft noise, creating additional costs for healthcare and noise reduction measures.
However, the sector receives significant tax exemptions compared with other industries. International flights are subject to a 0% VAT rate, while aviation fuel is exempt from the excise tax imposed on other fuels.
The proposal is being considered ahead of the 2027 state budget discussions. It has not yet been adopted, and its implementation will depend on the government’s budgetary decisions.
