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Inside Israel’s proposed taxes for high-sugar drinks, plastics – analysis

CM 10/08/2021

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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, like flavored waters, will be taxed at 70 agorot per liter.
For reference, that means that 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 like diabetes, cancer, and liver, heart, and kidney damage. Some 40 countries around the world have implemented similar measures, according to the World Health Organization, with each country succeeding in dropping consumption by 20-50%. 
A study cited alongside the Economic Arrangements Law showed that 43% of Israeli children drink at least one high-sugar drink per day, at fourth among OECD countries. The calories ingested through that level of consumption translates to about 7 kg of extra body weight per year, doctors noted. Israeli health officials also noted that the tap water available in Israel is a much cheaper and healthier option.
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 tax rate proposed 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, spending about NIS 2 billion a year, according to Environmental Protection Ministry data.
That’s an average of 7.5 kg per year per person, five times more than the average in the European Union. A survey by the Environmental Protection Ministry found that a 25% increase in the price of plastic tableware would lead to a 14% decline in consumption and that doubling the price would cut consumption by about 40%.
The Environmental Protection Ministry also found that the 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%.
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 1.1 billion to the state’s tax revenues- NIS 800 million from disposable utensils and NIS 300 million from sweet beverages.
Critics of the measures are angry about the way Finance Minister Avigdor Liberman has presented the new measures as tools to help increase tax revenues – especially as Liberman has vowed not to raise tax rates.
Some in the Ultra-Orthodox world have also charged that these measures are targeted against them, since, as the largest consumers of both high-sugar drinks and disposable plastics, they would bear the brunt of the burden. 

Source: Jerusalem Post

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