Not so sweet: The impact of the Portuguese soda tax on producers

Judite Goncalves, Roxanne Merenda and João Pereira dos Santos

No 938, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: In February 2017, Portugal implemented a tax on sugar-sweetened beverages (SSBs), under which producers were to be taxed according to the amount of sugar contained in the drinks they manufactured. We exploit administrative accounting data covering the universe of Portuguese firms between 2012 and 2019 to assess the causal impact of this tax on the behavior and performance of producers of SSBs. Our identification strategy relies on event study specifications, using producers of bottled water as counterfactual. Our findings indicate that SSBs producers became significantly less profitable in the post-tax period, vis-à-vis water bottlers, which was driven by a significant decrease in domestic sales. The soda tax hindered firms' capacity to convert receivables into cash and financial health deteriorated as liabilities grew. SSBs producers did not respond to this negative shock by cutting jobs or modifying their labor force towards relatively more skilled labor or higher R&D capacity.

Keywords: Firm-level impacts; policy evaluation; Portugal; public health; sugar-sweetened beverages tax (search for similar items in EconPapers)
JEL-codes: D22 H25 I18 L66 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-acc, nep-hea, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:938

DOI: 10.4419/96973099

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