Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.
by Rollins Howard
During the recent budget presentation by the Minister of Finance an increase of 10 per cent in the tax on sugar sweetened drinks was imposed.
This moved the tax which had been previously imposed from 10 per cent to 20 per cent, and which ostensibly was to assist in reducing the consumption of the beverages.
From my casual observations and comments made by various actors in the industry the tax did not seem to have had the desired effect. In fact, I believe that this same conclusion was not lost on the Minister of Finance hence the recent resultant increase in the tax.
I still find it difficult to determine if the imposition of the tax is meant to deter individuals, especially children, from consuming the drinks or if it is just another device to earn revenue.
The Heart and Stroke Foundation and the Coalition for a Healthy Caribbean have long advocated for a reduction in the consumption of sugar with special emphasis on the sugar sweetened drinks.
To achieve such a goal, I would have thought that the obvious approach would have been a consultation with the manufacturers with a view to reducing the amount of sugar in the drinks to an acceptable level which would not have done injustice to the term ‘sweet drink’, but would still have satisfied the NGO’s.
Instead, we have had the imposition of a tax which did not result in a reduction of consumption, but instead collected more tax. We now have an increase in the tax but based on my un-scientific research there is no guarantee that this will lead the required reduction in consumption.
My theory is that if the manufacturers reduce the sugar content of the drinks there will automatically be a decrease in the consumption of sugar, and if the usual trend follows sales will decrease in the first stages. However, after the initial reaction, sales will revert to their former levels.
This will result in a win/win situation because the Heart and Stroke Foundation and the Coalition for a Healthy Caribbean will have achieved their goal of reduced sugar consumption, the manufacturers will also benefit because their input costs (less sugar) would be lower with a resultant increase in their profits, whilst the Government would be the beneficiary of increase taxes on profits.
Is this such a fanciful notion?
