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Not so sweet: impacts of a soda tax on producers

Author

Listed:
  • Judite Gonçalves

    (Imperial College London
    NOVA University Lisbon
    Nova University Lisbon)

  • Roxanne Merenda

    (Nova University Lisbon)

  • João Pereira dos Santos

    (ISEG – University of Lisbon
    Queen Mary – University of London
    IZA – Institute for Labor Economics
    REM – Research in Economics and Mathematics)

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.

Suggested Citation

  • Judite Gonçalves & Roxanne Merenda & João Pereira dos Santos, 2024. "Not so sweet: impacts of a soda tax on producers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(5), pages 1388-1412, October.
    • Handle: RePEc:kap:itaxpf:v:31:y:2024:i:5:d:10.1007_s10797-023-09808-7
    DOI: 10.1007/s10797-023-09808-7
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