Smotrich cuts sugary drinks tax, Arabs biggest beneficiaries

Israel’s Minister of Finance Bezalel Smotrich today signed an order canceling the tax on sugary drinks introduced by his predecessor Avigdor Liberman. Smotrich tweeted, “Ahead of Pesach and as part of the fight against the cost of living we have cut the tax on sweetened drinks. We are talking about a significant reduction in the public’s shopping basket.”

The tax imposed by Liberman, which was aimed at improving the health of the public and combating diabetes, was viewed as anti- Haredi by the ultra-Orthodox community because of its large consumption of sweetened drinks.

Central Bureau of Statistics figures for household consumption in 2019 (before the tax was imposed) show that while non-Haredi households per capita spent an average NIS 43 a month and Haredi households spent NIS 65 per month, the average Israeli Arab household spent NIS 112 per month, making them the biggest beneficiaries.

The Central Bureau of Statistics survey found that Arab households drank huge amounts of sugary drinks, often over NIS 1,000 per month. Of the families surveyed three of the five biggest consumers of sugary drinks were Arab families.

Economist Tom Sadeh who gathered the data said, “These results are contrary to the intuition created in the public discourse, but these are the data. A similar ratio can also be seen in the household expenditure survey of 2018 and 2020, the most recent. But it is better not to rely too much on 2020, because too few people responded to the survey that year. It seems that the ones who will benefit the most from the tax cut initiated by Smotrich will be the Arabs and not the Haredim who insisted on its cancelation.

Published by Globes, Israel business news – en.globes.co.il – on March 28, 2023.

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