Tax Authority Study: Drink prices have not returned to pre-tax levels

The tax on sugary drinks was already canceled more than three years ago, but a new study published on Wednesday by the Tax Authority reveals that part of the price increase that occurred during the tax period remained in the prices paid by Israelis even after its cancellation. The data is particularly prominent when examining some of the popular drinks associated with the Central Bottling Company group — including Coca-Cola, Coca-Cola Zero, Fuze Tea, and Prigat products.

A source at the Tax Authority noted in a conversation with C14 that "the study did not include an analysis of the source of the increase in the consumer price." According to him, "it should be assumed that both the beverage companies and the retail chains increased profits as a result of the imposition of the tax."

The purchase tax on sugary drinks came into effect in January 2022 and was canceled at the end of March 2023. The Tax Authority sought to check not only how its imposition affected consumption, but also what happened to prices after the state decided to cancel it.

The general conclusion of the researchers is unusual: for most of the drinks tested, at the time the tax was imposed, the price increase was higher than the amount of the tax itself, even after neutralizing inflation. Conversely, when the tax was canceled, the decrease in prices was lower than the amount of the tax that was removed. The Tax Authority determined that in the short term, manufacturers passed the full tax on to consumers and even took advantage of its imposition to raise prices, while after the cancellation, the full tax reduction did not return to the consumer.

Coca-Cola: The tax was 1.02 shekels — the price rose by 1.24 shekels

One of the most prominent examples in the table is Coca-Cola. Before the tax was imposed, the average price was 3.85 shekels per liter. The tax burden appearing in the study stands at 1.02 shekels per liter, but during the tax period, the average price reached 5.09 shekels — a jump of 1.24 shekels, or 32%.

Then came the tax cancellation. Despite the removal of a tax burden of 1.02 shekels per liter, the price fell by only 81 agorot and reached an average of 4.28 shekels. Later, the price rose again, and in 2025, the average price was already 4.75 shekels per liter. In other words, the price measured in 2025 was about 90 agorot per liter higher than the price before the tax was imposed — a cumulative price increase of 23%.

A similar pattern emerges with Coca-Cola Zero. The average price before the tax was 3.90 shekels per liter. During the tax period, it climbed to 4.90 shekels, and after its cancellation, it fell by only 60 agorot to 4.31 shekels. In 2025, the price was already 4.80 shekels per liter — here too, this is a price increase of 23% compared to 2021.

Not just Coca-Cola: also Fuze Tea and Prigat

The picture is not limited to the Coca-Cola brand. Peach Fuze Tea, which also appears in the table, was sold before the tax was imposed at an average price of 4.83 shekels per liter. During the tax period, the price rose to 5.98 shekels, and after its cancellation, it fell by only 65 agorot to 5.33 shekels. In 2025, the price was 5.75 shekels — 19% more than the price measured before the tax.

Also in the Prigat products tested, a significant gap remained. Prigat orange juice rose from 4.34 shekels per liter before the tax to 5.49 shekels during the tax period. After its cancellation, the price fell by 63 agorot to 4.85 shekels, but in 2025 it was already 5.22 shekels — a price increase of 20% compared to the period before the tax.

It is important to emphasize that the study's data deal with consumer prices and do not present the profit margins of the Central Company or the distribution of the price gap between the manufacturer, the marketer, and the retail chains. Therefore, it is not possible to conclude from the table alone how much of the price increase became the company's profit. However, the data clearly indicate that for the products tested, the cancellation of the tax did not return prices to the levels recorded before its imposition.

The state gave up the tax — the consumer did not get it all back

In 2022, the beverage tax brought in about 900 million shekels. The Tax Authority estimates that if the tax had remained in effect in 2025, it would have increased state revenues by about 1.05 billion shekels.

The tax also had an impact on consumption habits. After its imposition, a decrease of about 12% was recorded in the consumption of sugary drinks. After its cancellation, consumption rose by only about 5% — meaning, even after the tax disappeared, consumption did not return to its previous level.

The Central Bottling Company stated:

"The Central Bottling Company reduced the price of its products to retailers by the full amount of the beverage tax immediately upon its cancellation. Any other claim is an absolute lie and defamation with all that this implies. It is worth noting that as long as the tax applied, the company transferred the full amount of the tax to the state treasury."