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State refuses to be “blackmailed” as Coca-Cola suspends €40 million investment due to sugar tax

The Portuguese government has said it will not be “blackmailed” after Coca-Cola announced that it has suspended a €40 million expansion project at its Refrige factory in Palmela due to the new “sugar tax” included in the 2017 State Budget.
Coca-Cola deems the levy “unconstitutional” and says it poses “unfair discrimination” as some national beverage producers won’t be subjected to it.

As i newspaper explains, the tax will impose a 16.46 cent price hike on every litre of soft drink. In other words, a can of Coke (33cl) will become 5.5 cents more expensive.

As a result, the soft drink company suspended the factory’s expansion plan and has also run ads in national newspapers reading: “Years and years reformulating our products and creating new ones with less sugar. Why another tax?”

The issue was brought up in Parliament on Tuesday (November 15) by CDS MP and former Social Security Minister Pedro Mota Soares, who expressed concern that the new tax could affect investors’ confidence in the country.

His concerns were shut down by Economy Minister Manuel Caldeira Cabral.

“The government shouldn’t pay attention to that kind of blackmailing. Investments should be made by companies that want to focus on the Portuguese economy and on the competitiveness the country offers,” he said.

Cabral added that he believes Coca-Cola will continue investing in Portugal but is “lobbying” at the moment, which he admits could be a “possibly legitimate” tactic.

The minister went even further and insinuated that CDS-PP was “lobbying” for Coca-Cola.

“I don’t know if that’s a job that CDS’ parliamentary group should associate itself to, at least in that way”.

Mota Soares fired back at the minister, saying that he met with workers of the company as well as a workers’ union that said that “measures like this (sugar tax) affect investment and jobs”.

The Refrige factory is located in Palmela, Setúbal and produces around 90% of the Coca-Cola products sold in Portugal. It employs around 450 people and is said to be responsible for another 4,400 indirect jobs.

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