Israel taxed sugary drinks for a year, then repealed it. Sales never fully recovered

Sugar taxes are usually evaluated by watching what happens after they are introduced. Israel produced a rarer experiment: it introduced one in January 2022 and repealed it a year later. That gives researchers something almost no other country can offer — a before, a during, and an after.

An analysis published in Public Health on 9 January reports what the national sales data shows [s1]. The result is more interesting than a simple "taxes work" or "taxes don't."

What the tax did

The Israeli tax combined an ad-valorem component with a tiered component based on sugar content [s1]. The researchers used national sales data in a longitudinal analysis, categorising beverages by sugar content and container volume into six groups — large and small, in non-taxed, reduced-tax and full-tax bands [s1]. Changes across the three periods were assessed with Welch ANOVA and a linear mixed-effects model [s1].

Prices moved first, and by a lot. With implementation, prices across all beverage categories rose by between 3.03% and 38.89% [s1]. That range covers untaxed products as well as taxed ones, which is itself informative about how retailers respond to a tax on part of a shelf.

Sales followed price, but only above a threshold. Change in price and change in sales were negatively correlated during the tax period (r = −0.54, p < 0.001) and after repeal (r = −0.29, p < 0.001) [s1]. A price increase of 17% or more was associated with significant sales declines during the tax year [s1].

Where the price rose enough, the effect was substantial. Sales of large reduced-tax beverages fell 30.7% and large full-taxed beverages 24.1% after implementation [s1]. Small taxed beverages showed no significant change in sales across any period [s1] — a design lesson the authors draw out directly, recommending that effective policy consider higher tax rates for smaller packages [s1].

What repeal did not do

Repeal is where this study earns its place. Two things failed to return to baseline.

Prices stayed elevated. After the tax was removed, prices remained 6.8% to 13.63% above pre-tax levels [s1]. The tax came off; the price did not fully come off with it.

And sales stayed down. Following repeal, sales of taxed beverages rose gradually compared with the tax period, but remained below pre-tax levels by 24% for large reduced-tax beverages and 13% for large full-taxed beverages [s1].

The authors read the repeal as having a potentially negative effect on public health, since sales began climbing again [s1]. That is fair. But the persistence is the striking part: a tax in force for twelve months left a measurable mark on purchasing behaviour after it was gone. Whether that reflects durable habit change, retained price levels, or both, the study cannot separate.

The other half of the evidence: what models predict

Almost every other country considering these policies is working from projections rather than natural experiments. Two January papers on India show what that looks like.

A modelling study in PLOS Medicine, published 5 January, examined taxing foods high in fat, sugar and sodium across India [s2]. It used a nationally representative expenditure survey of 261,746 households, dietary requirements and food composition tables to model nutrient intake, estimated price elasticities across three income terciles with an Almost Ideal Demand System model, and projected long-term outcomes through a dynamic microsimulation model [s2].

On average, 9.9% of total energy intake in India comes from items classified as high in fat, sugar and sodium under the Food Safety and Standards Authority of India's 2022 draft labelling regulations [s2]. Applying the highest Goods and Services Tax rate of 40% to those items was associated with a persistent average per capita decrease of 0.1705 kg/m² in body mass index (95% CI −0.1709 to −0.1700) and 45.8 mg in daily sodium intake (95% CI −45.9 to −45.7) [s2].

Over thirty years, the model projects annual disease incidence falling by up to 1.72% on average and 0.63 million disability-adjusted life years prevented per year across ischaemic heart disease, chronic kidney disease, stroke, diabetes and asthma, with total health expenditure falling by US$601 million per year [s2]. Tax revenue from foods and beverages would rise 92.0%, with household spending up only 1.0% [s2].

There is a distributional wrinkle the authors flag: larger absolute health gains accrue to higher-income individuals, because they start from higher baseline consumption of these foods [s2]. That is the opposite of the usual equity argument for sugar taxes.

The confidence intervals in that study are extraordinarily narrow — a BMI change specified to four decimal places with an interval spanning less than 0.001 kg/m². Those are the model's internal uncertainty bounds, not a measure of how well the model represents India. The paper is also explicit that it captures only energy and sodium intake changes, and does not model underlying temporal disease trends [s2].

A separate analysis in Nutrition and Health, published at the end of December, estimated the price elasticities underneath [s3]. Using the 2022-23 National Sample Survey Office household survey and Euromonitor retail data with a three-stage econometric model, it found overall own-price elasticity for sugar-sweetened beverages of −0.8, with low-income households more responsive (−0.97) than high-income ones (−0.77) [s3]. Affordability of these drinks rose 33% between 2015 and 2024 [s3]. Its simulation suggested an 18.5% ad valorem excise tax could cut consumption by around 10% and raise annual tax revenue by 50%, while a uniform 40% peak GST had a smaller consumption impact [s3].

Reading the two kinds of evidence together

The Israeli data suggests the threshold effect is the thing that matters: below roughly a 17% price increase, nothing measurable happened to sales [s1]. The Indian elasticity work suggests a tax design that raises price by enough on the right products would move consumption by about 10% [s3], and that a uniform 40% peak GST rate produced a smaller consumption impact than a targeted excise [s3].

All three point the same way on design: the rate, the base and the package size matter more than whether a tax exists. A tax that raises prices by 5% on the products people actually buy is a revenue measure, not a health measure.

None of this settles whether such taxes are worth their political cost, and the Israeli case shows the political cost is real — the tax was repealed within a year.

What to watch

Whether Israeli sales continue their gradual return toward pre-tax levels, which would suggest the persistence was price-driven rather than habit-driven, and whether India's GST treatment of high-fat, sugar and sodium foods moves toward a sugar-content-based excise as both Indian papers recommend.

Sources

1. [s1] The effect of the Israeli sugar sweetened beverage tax implementation and repeal on beverage price and purchases. Public Health, 9 January 2026. https://doi.org/10.1016/j.puhe.2025.106118
2. [s2] Taxation of foods high in fat, sugar, and sodium in India: A modelling study of health and economic impacts. PLOS Medicine, 5 January 2026. https://doi.org/10.1371/journal.pmed.1004572
3. [s3] Sugar-sweetened beverages in India: Price elasticity, affordability, and taxation. Nutrition and Health, 30 December 2025. https://doi.org/10.1177/02601060251410032