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Not So Sweet: Impacts of a Soda Tax on Producers

Author

Listed:
  • Goncalves, Judite

    (Universidade Nova de Lisboa)

  • Merenda, Roxanne

    (Universidade Nova de Lisboa)

  • Pereira dos Santos, João

    (Queen Mary University of London)

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, vis-à-vis 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 towards higher R&D capacity. Forgone corporate income tax appears negligible compared to the government revenue generated by the tax itself.

Suggested Citation

  • Goncalves, Judite & Merenda, Roxanne & Pereira dos Santos, João, 2023. "Not So Sweet: Impacts of a Soda Tax on Producers," IZA Discussion Papers 15968, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15968
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    More about this item

    Keywords

    sugar tax; soda tax; firm-level; sin taxes;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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