Gov't adjusts sugary drinks tax after industry backlash

Finance Minister Fayval Williams on Tuesday announced a revised special consumption tax on sugary drinks, shifting from a volume-based system to one based on sugar content.

The change follows backlash from industry players and criticism from the Opposition People’s National Party.

The revised tax, set at 22 cents per gram of added sugar, will take effect May 1, instead of April 1, to allow time for implementation, Williams told the House of Representatives.

“The logic of this design is simple and principled; it is the sugar that causes the harm, so it is the sugar that should be taxed,” she said, noting that the SCT was conceived as a health measure.

“A beverage with no added sugar will attract no SCT, a beverage with modest added sugar will attract a modest SCT, a beverage with higher sugar content will attract a higher SCT directly and proportionately.”

Williams said the adjustment followed stakeholder feedback.

“We listened to the various representations, clearly assessed them and where they have merit we act,” she said.

The tax was first announced in February.

In response, William Mahfood, chairman of Wisynco Group Limited, a leading beverage manufacturer and distributor, criticised the tax as unclear and “prejudicial”.

He argued then that the proposal treated low- and high-sugar drinks the same and unfairly targets beverages while other sugary products remain untaxed. “This is effectively a tax on poor people – $10 billion coming out of the pockets of the average man on the street,” he said.

Opposition spokesman on finance Julian Robinson questioned whether the tax will change consumption, arguing demand is “relatively inelastic”. He also warned that the burden will fall on the poorest.

Deborah Chen, executive director of the Heart Foundation of Jamaica, welcomed tax a “long-overdue win”. “Finally, public health has won,” she told The Gleaner last month, noting that “sugary drinks are a major contributor to obesity, diabetes, and tooth decay.”

In announcing the revision on Tuesday, the finance minister said the modified structure creates a genuine commercial incentive for manufacturers and importers to reduce the sugar content of their products.

The minister also said aid she wanted to send a clear signal that “this is not the end of the conversation.

“We will monitor this application in practice, its effect on prices, on consumption patterns, on reformulation decisions and on public health outcomes,” she said.

The SCT was among the measures imposed by the Government to raise $18 billion in revenues for the new fiscal year.

-Livern Barrett.

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