How the repeal of the sweet drink tax affected Israelis' wallets

Israel's Tax Authority analyzed the repeal of the excise tax on sweet sodas. The introduction of the tax led to a price increase and a 12% drop in demand. After the repeal, prices did not fully decrease, and sales only rose by 5%. The ultra-Orthodox were most sensitive to the changes. The rate was 1 shekel per liter for sweet drinks and 0.7 for less sweet ones. In the first year, the tax brought in nearly 900 million shekels.

Specialists at Israel's Tax Authority analyzed the consequences of repealing the excise tax on sweet carbonated drinks, which was in effect from the beginning of 2022 to spring 2023. The introduction of the tax led to a sharp increase in product prices and a drop in demand of about 12%. After the repeal, retail prices did not decrease by the full amount of the abolished duty, so the savings only partially reached consumers. Sales volumes recovered partially, increasing by 5%, but did not reach pre-crisis levels. The ultra-Orthodox population segment proved most sensitive to price changes. The excise rate was one shekel per liter for drinks with high sugar content and 0.7 shekel for less sweet ones, with higher coefficients for concentrates. In the first year, the tax added nearly 900 million shekels to the treasury, and according to forecasts, in the current year the amount could have exceeded one billion.