Sugar tax needs revising
RECENTLY THERE HAS BEENmuch debate about whether the sugar tax on soft drinks should be increased from ten per cent and, if so, whether the new rate should be 20 per cent or even 50 per cent.
I support the concept of encouraging consumers to consume healthier beverages. I work with a company that distributes a wide range of beverages, ranging from no-added sugar to high levels of sugar, so I do have that perspective and possible perceived conflict of interest.
At our company we are constantly seeking to source healthier alternatives that are still appealing to the consumer.
While I believe that the sugar tax can be a useful lever to encourage healthier consumption, it should be modified to make it more effective. Currently the tax is applied at the same rate whether the beverage is low-sugar, medium-sugar or high-sugar added. This gives no incentive for the supplier or the consumer to switch from high-sugar to low-sugar.
A more effective way would be to have three tax bands – low tax for low-sugar added beverages, medium tax for medium-sugar added and high tax for high-sugar added. Generally if an item contains less than five grammes of sugar per 100 grammes, it is considered low-sugar, over 15 grammes per 100 grammes it’s high-sugar, and anything in between is medium-sugar. Perhaps a tax could be levied at ten, 20 and 30 per cent for each of the three bands. There would then be a clear incentive for suppliers and consumers to move to low-sugar drinks.
The other issue with the sugar tax is that it is also applied on products such as soya milk and almond milk (tariff heading 2202.90.90), but the tariff heading makes no distinction between products that contain no added sugar and those that do. This means that unsweetened soya and almond milk also attract a ten per cent excise tax. The Barbados Revenue Authority and the Customs Department are aware of this anomaly and have identified that a simple break-out in the tariff heading would solve it but, so far, have not made this correction.
So, yes, the sugar tax can be useful but it needs to be refined to make it more effective.
– ANDY ARMSTRONG,
Armstrong Agencies Ltd.