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

Author

Listed:
  • Goncalves, Judite
  • Merenda, Roxanne
  • dos Santos, João Pereira
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.

Suggested Citation

  • Goncalves, Judite & Merenda, Roxanne & dos Santos, João Pereira, 2022. "Not so sweet: The impact of the Portuguese soda tax on producers," Ruhr Economic Papers 938, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:938
    DOI: 10.4419/96973099
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    References listed on IDEAS

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    More about this item

    Keywords

    Firm-level impacts; policy evaluation; Portugal; public health; sugar-sweetened beverages tax;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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