Israel’s new budget for 2021-2022 includes new taxes on high-sugar drinks and disposable plasticware intended to reduce their consumption. If approved, the new taxes will make these products more expensive for consumers to incentivize shoppers to choose healthier and more environmentally friendly options.
Last week, the cabinet approved the Finance Ministry’s proposal for the state budget, which includes NIS 35 billion in spending for 2021 and NIS 38b. for 2022. The Knesset Finance Committee is now preparing it for the Knesset plenum, where it must pass into law after three readings by November 4.
According to the plan outlined in the Economic Arrangements Law accompanying the budget, drinks with high sugar levels will be taxed NIS 1.30 per liter. Diet soft drinks and those with less added sugar, such as flavored waters, will be taxed 70 agorot per liter.
For reference, that means a 1.5-liter bottle of Coca-Cola and other soft drinks will cost about two shekels more each, NIS 1.95 to be exact. Coke Zero and other diet drinks would cost NIS 1.05 more.
The price of a 330-ml. can of Cola goes up 43 agorot, and the price of a 500-ml. bottle of flavored water would rise 35 agorot. Coca-Cola Israel, which controls a large majority of the country’s soft-drink market, is said to be working hard to contest the decision.
Israel would not be the first country in the world to tax high-sugar drinks, which are seen as significant contributors to obesity and deadly medical conditions such as diabetes and cancer and damage to the liver, heart and kidneys. Some 40 countries around the world have implemented similar measures and have succeeded in dropping consumption by 20%-50%, according to the World Health Organization.
About 43% of Israeli children drink at least one high-sugar drink per day, the fourth highest percentage among OECD countries, according to a study cited alongside the Economic Arrangements Law. The calories ingested through that level of consumption translate to about seven kilograms of extra body weight per year, according to doctors. The tap water available in Israel is a much cheaper and healthier option, Israeli health officials have said.
Regarding disposable plastic utensils, the proposed tax is NIS 11 per kilogram. The Finance Ministry projects that would reduce the usage of such items by about 41%. The proposed tax rate would approximately double the price for certain items.
The tax will be levied on cups, plates, bowls, cutlery and straws. Bottles are treated under the Deposit Act, and packaging is legislated under the Packaging Act.
Israel is well known as one of the biggest consumers of disposable plastics in the world. Israelis throw away about 70,000 tons of plastics per year and spend about NIS 2b. a year buying them, according to the Environmental Protection Ministry.
That’s an average of 7.5 kg per year per person, five times more than the average in the European Union. A 25% increase in the price of plastic tableware would lead to a 14% decline in consumption, and doubling the price would cut consumption by about 40%, a survey by the Environmental Protection Ministry found.
The haredi (ultra-Orthodox) sector, which comprises about 9% of the population, is responsible for 27% of discarded trash, while the Arab sector accounts for 14%, and the general sector generates 59%, according to the survey.
Israel’s beaches are among the most littered with plastics in the region, according to the World Wildlife Fund for Nature. Some 90% of the trash found on the beach is disposable plastic.
“Like cigarettes and alcohol, disposable plastic is an addiction,” Environmental Protection Minister Tamar Zandberg said. “We are drowning in disposable plastic, and we all see its problematic effect on the cleanliness of the land and our quality of life. That will bear the most significant cost of the damage. Disposable plastic production is based on polluting fuels and has a negative impact on the climate crisis as well. I call on everyone to move to reusable tools for the health and environment of us all.”
There is a precedent in Israel that such a tax would work. Since 2017, customers shopping in large supermarkets are required to pay 10 agorot for each plastic bag they take when checking out. That measure immediately cut the number of bags taken by some 85%, although consumption has been creeping up slowly since then.
The Finance Ministry estimates that these two measures together will add NIS 1.1b. to the state’s tax revenues: NIS 800 million from disposable utensils and NIS 300m. from sweet beverages.
Critics of the measures are angry about the way Finance Minister Avigdor Liberman has presented them as tools to help increase tax revenues, especially since he has vowed not to raise tax rates.
Some haredim have said these measures are targeted against them because, as the largest consumers of both high-sugar drinks and disposable plastics, they would bear the brunt of the burden.