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Not so sweet: impacts of a soda tax on producers

Judite Gonçalves, Roxanne Merenda and João Pereira dos Santos ()
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Judite Gonçalves: Imperial College London
Roxanne Merenda: Nova University Lisbon
João Pereira dos Santos: ISEG – University of Lisbon

International Tax and Public Finance, 2024, vol. 31, issue 5, No 8, 1388-1412

Abstract: Abstract Portugal introduced a sugar-sweetened beverages (SSB) tax in 2017. This study uses unique administrative accounting data for all SSB producers/importers in Portugal, and an event study design with bottled water firms as the primary comparison group, to assess the causal impacts of the tax on multiple firm-level outcomes. We find a 6.8% average decrease in domestic SSB sales, relative to bottled water. The soda tax hindered SSB firms’ financial health, namely net income, ability to convert receivables into cash, and liabilities. SSB producers/importers did not decrease wages, cut jobs, or modify their workforce toward higher R&D capacity. Forgone corporate income tax appears negligible compared to the government revenue generated by the tax itself.

Keywords: Sugar-sweetened beverages tax; Soda sales; Soda manufacturers; Firm-level outcomes; Industry responses; Event study; H25; L20; L66 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10797-023-09808-7

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