The carbon tax received the blessing of the finance committee

The Finance Committee of the Knesset approved the carbon tax today (Wednesday). However, the decree has not yet taken effect, as the committee has not held a vote on it. The hearing was intended to secure the committee’s advance consent, since once the order is published, it cannot be amended—only accepted or rejected in its entirety.

Two entities were excluded from the order: the desalination plants and the Nesher cement plant, both of which also sought exclusion during the previous attempt to pass the tax earlier this year. The exemption for Nesher is contingent on its compliance with Ministry of Environmental Protection regulations aimed at reducing pollutant emissions.

The industrial sector agreed to the decree after the Treasury provided a compensation mechanism, which will gradually decrease over the coming years. The decree is expected to be published in the coming weeks, at which point it will be brought to a vote in the Finance Committee, where it must be accepted or rejected as approved today.

The implementation of a carbon tax is a significant step aimed at reducing harmful carbon emissions. The rationale behind such a tax is grounded in the “polluter pays” principle, which holds that those who contribute to pollution should bear the cost. By taxing the use of fuel, this policy seeks to incentivize a shift toward cleaner energy sources and more sustainable practices.