Portugal slaps higher VAT on cigarettes and soft drinks

Portugal’s State Budget for 2019 has slapped higher taxes on sugary drinks and tobacco.

Non-alcoholic beverages with a high sugar content like Coca-Cola are to face higher tax penalties while drinks with lower sugar levels will enjoy tax reductions of 5 cents.

Drinks with a sugar level of less than 25 grams per litre pay a tax of €1 per 100 litres while beverages with a sugar content of between 25 grams and 50 grams per litres will face stiff taxes of €6 per 100 litres.

At present all drinks which have less than 80 grams per litre pay €8.34. The new tax scales are: soft drinks with less than 25 grams per litre will pay €1 per 100 litres; b) soft drinks with amounts of sugar between 25 grams and 50 grams per litre will pay a tax of €6 per 100 litres; c) drinks with between 50-80 grams per litre will pay €8 per 100 litres; and d) drinks with 80 grams of sugar or over per litre will pay €20 per 100 litres.

Tobacco too will become more expensive in Portugal with the price of a pack of 20 cigarettes going up anywhere between 2.46 cents and 10 cents per pack according to different sources including consultants Ernst & Young.

Whether of not these increased taxes will be reflected in the increased costs of tobacco products for consumers, however, will depend on the pricing policy of tobacco companies which may choose to absorb the impact of increased taxes and maintain prices as they are.