‘Tax on soft drinks not having desired health impact’ - by admin March 20, 2018

A leading health academic is contending that the ten per cent tax imposed on soft drinks over two-and-a-half years ago was not having the desired health effects because Government was motivated by the revenue.

In addition, Director of the George Alleyne Chronic Disease Research Centre Dr Alafia Samuels said the impact has been further cushioned by a decision by the soft drink industry to absorb some of the increase.

“Usually, when we are going to do something like this it is a health intervention, and so it would be important to have public education to prepare the public. But in reality, in Barbados this intervention was driven more by tax revenue, and so it was announced and implemented quickly without a chance for real public education to take place,” Samuels told a University of the West Indies Faculty of Medical Sciences public symposium at the weekend.

Following a recommendation by the International Monetary Fund in 2014 for Government to tax semi-processed and processed foods and soft drinks among other items, as a revenue raising measure, Minister of Finance Chris Sinckler had announced in June 2015 that he would impose a ten per cent tax on sweetened beverages in an effort to persuade Barbadians to consume less sugar.

The excise tax, which took effect on August 1, 2015, was applied to the cost of locally produced and imported sweetened beverages such as carbonated soft drinks, juice drinks, sports drinks and fruit juices.

At the time Sinckler had announced that it should generate in excess of $10 million in revenue for the remainder of the financial year 2015/2016, and he had promised that after two years it would be reviewed to determine how it affected the behaviours of producers, importers and consumers and whether it should be extended or intensified.

While that review did not take place, the tax continues at the initial level, despite relentless appeals from Professor Emeritus of the University of the West Indies Faculty of Medicine Sir Henry Fraser to increase it to 30 per cent.

While Samuels called for a lesser increase – to 20 per cent – she said while Government continued to earn revenue from the tax, consumers were not paying the full price because “the industry has absorbed some of that tax, and on the shelf you are only actually seeing a six per cent tax difference in prices.

“Obviously, it’s what the consumer faces when they are going to the checkout register that matters, and the consumer is facing only a six per cent difference and this is going to influence their behaviour,” the health academic said.

In addition, she said, the weakening Trinidad and Tobago currency had also impacted the cost of the drinks, making them more affordable.

“The Trinidad and Tobago dollar has been weakening over time which means that their products, including their sugar-sweetened beverages coming into the island, are actually more competitively priced.

“It meant that some of those drinks are at a lesser price than they would have been had the Trinidad dollar remained stable.”

Samuels said in the initial stages it appeared the tax was having some impact as there had been a marginal decrease in the consumption of sweetened beverages, and an increase in purchases of bottled water.

However, she said, that had since changed, “so at present that time difference is not as great”.

In any event, she explained, the data was limited because researchers had obtained their information from the islands “largest grocery store chain” and the “largest gas station”.

“But maybe the people who shop at those places are not typical of all Barbadians and it also is possible that people changed where they shop for certain things after the tax came in,” she said in pointing to variations in consumer habits that affect the accuracy of the study.

“It is also possible that people bought some of the things that were not taxed, like the powders and syrups. So that where we see a fall in the consumption of sugar beverages, maybe what people did was to buy the syrup instead,” she said, adding that the buying habits of tourists could also have had an impact.

“How much is being bought by tourists? They all shop at the same supermarkets that we do and if the number of tourists change then the number of products change, the number of products [bought] are going to change and maybe they buy differently from us [locals] and that complicates the matter,” she explained.

Barbados TODAY investigations had revealed that six months after the tax took effect only $2 million had actually been collected by the Treasury.

However, the island’s leading beverage manufacturer Banks Holdings Limited had said its business had suffered “a definite hit”.