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#BTSpeakingOut – A sweet drink ‘sin tax’

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Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.

by Michael Ray

The truth of the matter is that the tax recently placed on sweet drinks is a “Sin Tax”.

For those who are not familiar with the the words sin tax, please note: A sin tax is a tax levied on goods or services that are considered to be harmful or costly to society.

The goods and services commonly include tobacco, alcohol, sugar-added drinks, and gambling. The main purposes of imposing sin taxes are to reduce the consumption of harmful goods and to increase government revenue. The consumption reduction is achieved by making the goods less affordable to consumers.

In typical Pigouvian style, the government has increased taxation on unhealthy sugar-sweetened drinks .

There are a number of negatives attached to sin taxes.

The following three are the most regularly mentioned:

1. Sin taxes are regressive in nature. They discriminate against the poorest in the society, placing a bigger financial burden on them than that placed on those who are wealthier.

2.The imposition of sin taxes can result in non-compliance and other illegal activities.

3. All consumers do not respond to the tax in a similar manner.  Some consumers may stop their consumption while others are not willing to change.

There is obviously a better way to deal with incidents of non-communicable diseases caused by the consumption of sugary drinks.

While the government is still battling with a huge financial deficit after much borrowing, there is still no need to further burden those at the bottom of the socio-economic ladder, who are most likely the major consumers of “sweet drinks”.

Better still would be the enactment of legislation limiting the sugar content of these drinks along with strict and stringent oversight by the Barbados National Standards Institution.

Sadly, this institution is hamstrung by its attachment to private sector interests, but needs to be detached and given the necessary legislative teeth in order to be an effective “guard-dog” and enforcement agency in matters of standards, quality assurance, quality control, measurements and similar matters.

Taxation does not remove the sugar content from sweetened drinks, only the producers can effect
such change.

Consumers will still have access to these sugary drinks after increased taxation, with no guarantee of a decline in consumption.

However, there is a likelihood of reduced cases of NCD’s if and when manufacturers and importers are mandated by law to adhere to reduced sugar in sweetened drinks . . .

Altogether, government, manufacturers and importers seemed to have missed a few of the following:

• Less sugar as an ingredient creates healthier drinks for consumers.

• Less sugar and healthier drinks should result in fewer NCD’s.

• Fewer NCD’s should result in less expenditure for the Ministry of Health.

• Less sugar in the manufacturing process means less production costs

• Less production costs can equate to increased profits..

• Increased profits equate to more tax revenue for government.

• A healthy population is better able to contribute to the cycle of economic activity.

Government is well advised to repeal taxation on sugary drinks.

Enact legislation limiting the sugar content of sweetened drinks.

Enact Legislation that will give BNSI more oversight and muscle.

The above is sure to result in a win-win situation for each and every Barbadian, without exception.

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