Finance minister cancels tax on sweetened drinks; doctors slam move as irresponsible

Bezalel Smotrich says act will significantly reduce consumer costs ahead of coming Passover holiday; physicians union says government ‘ignoring voice of reason’

Finance Minister Bezalel Smotrich signs a directive canceling a special tax on sugary drinks, March 28, 2023. (Finance Ministry)
Finance Minister Bezalel Smotrich signs a directive canceling a special tax on sugary drinks, March 28, 2023. (Finance Ministry)

Finance Minister Bezalel Smotrich on Tuesday signed a directive to cancel a tax on sweetened drinks that the previous government had introduced as part of a drive to reduce the consumption of unhealthy beverages.

Removal of the tax was a key coalition demand of the ultra-Orthodox parties, which argued that it had been introduced deliberately to target their communities.

Smotrich countered warnings of the health impact of such a move by saying he had ordered a team to work with the Health Ministry on promoting healthy eating habits and reducing sugar use.

MK Aryeh Deri, leader of the ultra-Orthodox Shas party, welcomed the development, while Israel’s doctors’ union slammed it as “irresponsible” and damaging to public health.

The directive was to be brought for cabinet approval later in the day.

In a statement, Smotrich said the move would be “a significant reduction in the public’s shopping basket” expenses ahead of the coming Passover holiday. The week-long holiday begins the evening of April 5.

Smotrich said that Treasury representatives held consultations with the leading manufacturers of soft drinks and the heads of major local authorities who committed to dropping prices within three days.

“At the same time, I agreed with the Health Ministry on establishing a joint team to examine encouraging the consumption of healthy food and reducing the consumption of sugar,” he added.

Plastic bags with bottles for recycling in Jerusalem, September 8, 2022. (Yonatan Sindel/Flash90)

The tax was put in place by Smotrich’s predecessor, Avigdor Liberman, now leader of the opposition Yisrael Beytenu party which champions secular rights. It had been criticized by the ultra-Orthodox, or Haredi, community as a deliberate move against it, and had been accompanied by a tax on single-use plastic utensils, aimed at preventing damage to the environment, which is also being canceled after the ultra-Orthodox railed against it as well.

Deri — a Smotrich ally — offered praise in a statement saying, “The political tax imposed by Liberman on sweet drinks has been canceled!”

“We don’t educate the public by hitting its pocket, but by smart and effective information, and that’s how we operate,” Deri said.

The Israel Medical Association panned Smotrich’s directive, expressing in a statement its “disgust at the lack of responsibility” for public health and economics.

“This is a tremendous gift to the beverage companies, at the expense of the public and at the expense of public health,” it said. “Once again, political and commercial interests prevail over the public interests.”

The IMA said the joint team mentioned by Smotrich was nothing more than “a sugar coating” and noted that past professional recommendations were to apply the tax and ban the advertising of sweetened drinks.

“But the government refuses to listen to the voice of reason, the voice of health, and the voice of science. Drink water,” the IMA said.

Ultra-Orthodox Israelis perceived the tax hikes — aimed at preventing harm to health and to the environment — as targeting them in particular, due to their reliance on such products. The Haredi community, which tends toward large families, is a major consumer of soft drinks and disposable tableware.

Smotrich spoke before last year’s November election about his opposition to the soft drink tax, which varies based on beverages’ sugar concentration, and called it “delusional.” He framed it as a cost-of-living issue rather than a public health issue.

His first act after being appointed the new government’s finance minister was to instruct ministry officials in January to roll back the tax hikes. There was an immediate backlash from international health experts, with some 32 top researchers from the US, UK, Mexico, and elsewhere writing to Smotrich and then-health minister Aryeh Deri urging them to reinstate the tax for the sake of public health.

Then in February, leading health scholars wrote in the medical journal The Lancet that abolishing the tax on soft drinks was a “grievous blow to public health” and “seriously tarnishes Israel’s international standing.”

Aryeh Deri speaks during a Shas party faction meeting at the Knesset in Jerusalem, on January 23, 2023. (Yonatan Sindel/Flash90)

Deri was initially appointed health and interior minister when the government was established at the end of last year, but was reluctantly fired by Prime Minister Benjamin Netanyahu in January after the High Court of Justice ruled that he was not fit to serve as a minister due to his most recent conviction for tax offenses.

Deri plans to return to his previous posts by way of a government bill that would end all court oversight on minister picks, as part of a wider legal shakeup that proponents say is needed to rein in an overreaching judiciary, but which critics warn will undermine Israel’s democratic foundations.

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