The tax revenues, which were destined entirely to the SUS, will now be part of the State’s general revenue. The fee has already generated more than R$500 million since its creation in 2017.
The Government decided put an end to direct allocation to the National Health Service (SNS) of revenues from the Tax on Beverages Added with Sugar or Sweeteners (IABA), known as the sugary drinks tax.
The change was introduced in the State Budget for 2026 without public debate and represents a significant change in philosophy who presided over the creation of this rate in 2017.
Since its implementation, the tax generated more than 533 million eurosalways aimed at the sustainability of the SUS. In 2025 alone, revenue reached 60.6 million euros. From this year onwards, however, these amounts will no longer be reserved for health, becoming part of the State’s general revenue.
The Ministry of Health justifies the decision with the need to “simplify the specific assignment modelmaintaining the principle that the global financing of the SNS is ensured through allocations from the State Budget.” According to the Government, allocation mechanisms should only be used when they are directly linked to concrete public health objectives.
The change was heavily criticized by experts and former healthcare chiefs. Speaking to , Fernando Araújo, former Deputy Secretary of State and Health, considers the change a “setback” and recalls that the measure was “designed with professional associations of doctors and nutritionists and with advice from the World Health Organization (WHO)”.
The president of the Order of Nutritionists, Liliana Sousa, also considers that the Government’s decision “changes the meaning” for which the tax was originally created and “ends up discrediting” the public health strategy.
Despite the change in the destination of revenue, experts emphasize that the tax continues to produce positive effects. Official data shows that between 2017 and 2024, the proportion of drinks with a high sugar content decreased significantly, while the average sugar content of drinks sold in Portugal fell by around 26%. The reformulation of tax bands in 2019 further encouraged the industry to reduce sugar in its products.
On the other hand, the beverage industry continues to defend the abolition of the taxarguing that its initial objective has already been achieved and that the tax harms the competitiveness of Portuguese companies in markets such as Spain.
The change follows the same line as a recent change regarding the tobacco tax. Previously, all tax revenue exceeding 1,466 million euros was destined to finance smoking prevention campaigns in the NHS. However, a new formula included in the 2026 OE set a limit of 2% of the portion of tax collection for this purpose. In practice, this change translates into one for the SNS.
