Portugal to Tax Sugary Drinks

17 Oct 2016 --- Portugal is the latest country to introduce a tax on sugary soft drinks with government plans to bring in a levy next year which will see increase the cost of a 330ml soda increase by around 5.5 cents and raise €80 million for public health. The country’s socialist government made the announcement just a few days after the World Health Organization (WHO) urged government’s around the world to adopt sugar legislation in the global fight against obesity and the associated health problems, claiming that rolling out such laws will curtail sugar consumption and cut diabetes rates. 

Beverages with a concentration of up to 80 grams of sugar per liter will be taxed by €8.22/hectoliter and there will be another level of €16.44/hectolitre and will focus on beverages in which sugar levels exceed 80 grams per liter. Milk-based drinks and juices will be exempt.

The Portuguese sugar tax will follow similar laws in France, Mexico, Hungary and forthcoming legislation in the UK and South Africa where there is heavy opposition to the plans. 

The Portuguese Association of Soft Drinks (PROBEB) opposes the proposed new tax, claiming that while it does recognize and support measures to reduce sugar intake curb obesity, the levy does not have public health objectives, is discriminatory and will have negative economic impacts in the sector. 

Instead PROBEB advocates developments in food standards and reformulations to remove to reduce sugar in soft drinks with the aim of cutting sugar in the Portuguese diet in general. 

“We are committed to reduce the calorie content of soft drinks between 2013 and 2020, at least 25 percent. By the end of 2015 we have reduced 10.7 percent. This is an effective contribution to the reduction of calories in the diet of the Portuguese, but it should be noted that the consumption of soft drinks is only 2 percent of calories ingested by the Portuguese,” says PROBEB. 

The organization says that while industry initiatives, including reformulations, are real, proven and effective, government plans to tax sugar as a way to curb consumption are “theoretical”, “hypothetical” and “highly questionable”, and may lead to consumption transfers where consumer switch to cheaper brands and product categories.

PROBEB argues that European Commission studies indicate uncertainty surrounding the effectiveness of food taxes in combating obesity and stress how portion controls and product reformulations have “10 times more impact on public health”, claiming the tax is more about collecting revenues. 

“The establishment of a special tax on soft drinks will lead to the transfer of consumption to cheaper brands which will have adverse effects for the national productive sector, since 85 percent of the volume of the manufacturer brands is produced in Portugal, while only 25 percent of the volume of private labels (cheaper) is of domestic origin.”

Portugal’s previous center-right government had talked about the possibility of such a tax before being ousted by the Socialists who came to power last year after teaming up with the Communists and the Far-Left block.