According to Veja’s Lauro Jardim, the Brazilian beverage industry (beer and soft drinks) formalized today what yesterday was only a threat: as a result of yesterday’s announcement by the government of an industrial stimulus package that increased taxation of beverage companies, the sector representatives met today and decided to suspend investments totaling R$7,9 billion that would have been made in 2012.

You may ask: but how exactly is Ambev and others getting screwed? We explain: together, the industry tax cuts from yesterday’s announcement represent about R$10 billion reais (US$5.5 billion) annually in forgone public revenue… part of which the government will seek to recover with tax increases on products such as alcohol and tobacco.

According to meeting participants, never before in history the beverage manufacturers have been surprised by a policy like yesterday’s without having previously met with the economic team.

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