Sour tax on sweet drinks - Soda price to jump by more than $10

Consumers can expect to pay about $12 more in taxes for each bottle of regular size (600 millilitre) soda they purchase.

Finance Minister Fayval Williams on Thursday announced the introduction of a Special Consumption Tax (SCT) on non-alcoholic sweetened beverages such as soda and fruit-flavoured drinks and under the General Consumption Tax (GCT) Act -- a move expected to rake in an estimated $10.1 billion when it takes effect in the first quarter of the new fiscal year. The tax will apply to all non-alcoholic beverages containing added sugar or other caloric sweeteners, as well as drinks made with artificial or non-nutritive sweeteners.

"The primary objective of this measure is not only revenue mobilisation," Williams said.

She said the measure also supports broader public health objectives, adding that Jamaica continues to experience elevated levels of obesity and diabetes. She said sweetened beverages are recognised as a significant source of extra sugar consumption.

"Any reduction in consumption resulting from the price adjustment would represent a positive supplementary outcome," she said.

Currently, sweetened beverages attract only the standard 15 per cent GCT and are not listed as prescribed goods for SCT purposes. That is about to change.

Julian Robinson, the opposition spokesman on finance, said the public health imperative driving the tax on sugary drinks is "a very big one" but expressed doubt that price increase will change behaviour.

"When you look at the demand for these goods and the the level of the increases, I would posit that it's a relatively inelastic demand, meaning that I don't believe that you're going to have much behaviour change," he said.

The Government plans to impose $18 billion in new taxes while continuing the extraction of $11.4 billion from the National Housing Trust to help fund its $1.4 trillion budget.

The SCT on alcoholic beverages will increase from $1,230 to $1,400 per litre of pure alcohol, while the SCT on cigarettes will rise by $3 per stick.

The Government also proposes removing the GCT exemption on the 20 per cent motor vehicle duty concession for public officials, increasing the environmental protection levy, and raising the GCT rate on tourism activities from 10 per cent to 15 per cent starting April 2027.