Wait… so the sugar tax isn’t just taxing sugar?

So Jamaica’s new tax on sugary drinks recently went into effect and already there are issues. 

WISYNCO Chairman William Mahfood was on Taking Stock recently, and he explained that the gazetted law actually includes taxes on artificial and alternative sweeteners too.

“So initially the Minister of Finance in her closing remarks at the budget had stated that only tax would only be applied on products with added sugar and sugar would be what would be taxed. In the actual gazette that was issued last week, it called for taxing all beverages with all sweeteners. So, it would be beverages sweetened with um nutritive sweeteners, with artificial sweeteners, things like monk juice or honey, etc,” he said.

Both the Ministry of Finance and the Ministry of Health have said that this tax should push manufacturers to reformulate their products and use alternatives. 

But if real sugar and artificial sweetener are going to be taxed the same, there’s no incentive to reformulate.

Because reformulation isn’t cheap.  There’s the research and development, then testing. And it’s a gamble.  What if the product comes to market and customers hate it? Because we can all tell when they change something in the formula. So you’re asking companies to take big risks, but with no incentive to save on taxes?

Mahfood also pointed out that there are some gaps in the bill.

“There are also some anomalies. For example, they are only taxing ready to drink beverages in in packages like glass, plastic or cans. They’re not taxing sodas that are sold like at at the fast food restaurants in a in the machine. So think those are the kind of things that you know we’re saying to the ministry that doesn’t make any sense,” he added.

That’s a whole segment of the industry that’s not being taxed. So not only is the government missing out on potential revenue, but it seems unfair to the manufacturers who are being taxed.

Mahfood said the industry and the JMEA have been in contact with the finance ministry, and hopefully, some clarification or amendments will be coming soon.

And that’s the bottom line.