Mixed response to sweet drinks tax
Economist Dr Winston Moore has suggested that the tax imposed on sweet drinks is not enough to result in a change in behaviour of consumers.
In fact, the University of the West Indies lecturer said he believed the move would only serve to raise revenue for the Government.
He made the comments yesterday morning as he participated in the post-Budget breakfast panel discussion of the Barbados Chamber of Commerce and Industry (BCCI).
In the 2015/2016 Financial Statement and Budgetary Proposals yesterday Minister of Finance Chris Sinckler announced that effective August 1, a 10 per cent excise tax would be applied to the cost of locally produced and imported sweetened beverages, such as carbonated soft drinks, juice drinks, sports drinks and fruit juices.
The tax will be levied on the value of the product before the Value Added Tax (VAT) is applied.
This measure is expected to generate in excess of $10 million in revenue this fiscal year and will be reviewed in another two years to determine how it affected the behaviours of producers, importers and consumers and whether it should be extended or intensified.
Noting that it was important to see how people would react to such tax, Moore said he was not hopeful of much change in behaviour.
The new tax is aimed at encouraging Barbadians to consume less sugar.
“I am not very optimistic that people will change their behaviour given the small amount of cap that is put in place, so this more of a revenue-raising measure. This tax on sweet drinks is just going to raise tax for the Government, it is not really going to change behaviour in any way,” he said.
On the other hand, local beverage producer Banks Holdings Limited is already looking at how it could change its behaviour when it came to the amount of sugar it is putting in its products.
Managing director Richard Cozier said while the tax move was “a slight negative” for that aspect of his business, he supported any move to tackle chronic non-communicable diseases.
“In our business we like our consumers to live very long lives and keep consuming,” he said.
“The tax will force manufacturers like us to look again at some of our operations where we can and see how we can, without impacting on the flavour profile, at reducing the level of added sugar. Sugar is an expensive input into our business and if we can reduce it without negatively impacting the flavour of the taste it would be of benefit,” said Cozier, adding that he was aware it was something authorities had been examining for some time.
Pointing out that the company’s portfolio consisted of a low calories and no sugar added line of products, Cozier said “as far as that tax is concerned I believe that the impact on the population will be minimum”.
In relation to the cellular phone tax, Moore said while he was not fully aware how it would work, he believed it could lead to “some very strange behavioural patterns” among Barbadians.
“People could simply use more data-based, voice calling; so your Skype and your Whatsapp calling. So it might actually mean that Barbadians behave strange in terms of the use of data,” he explained.
Effective August 1, 2015, a $0.03 per minute mobile-airtime excise duty will be charge for making calls on cell-phones. The Government is expected to earn $32.7 million in revenue from that measure annually.