Gov't revises tax on sugary drinks, environmental protection levy

 

The government has announced a revision to the special consumption tax (SCT) on non-alcoholic sweetened beverages. 

 

Closing the Budget Debate in the House of Representatives on Tuesday afternoon, Finance Minister Fayval Williams said following a meeting with manufacturers, the government has decided to implement the revenue measure in a tiered approach. 

 

"And because health has always been the underlying intent of the measure, we have redesigned the SCT to be based directly on sugar content rather than on the volume of the beverage. The special consumption tax on non-alcoholic sweetened beverage would therefore be levied at a rate of 22 cents per gram of added sugar rather than on the volume of the beverage," she announced. 

 

The Finance Minister acknowledged that the change would require more time for manufacturers, importers, as well as Tax Administration Jamaica to prepare. 

 

"As a result, the SCT will go into effect on May 1, 2026 instead of April 1. Madam Speaker, the logic of this design is simple and principled. It is a sugar that causes a harm, so it is a sugar that should be taxed," she noted.

 

Mrs. Williams said the government will monitor the application in practice, its effect on prices, consumption patterns, reformulation decisions, and the public health outcomes.

 

She added that the revision creates a commercial incentive for manufacturers and importers to reformulate and lower their sugar content. 

 

"To manufacturers and importers, the message is straightforward. Reduce the sugar in your products and the tax burden falls. The government is not seeking to harm a sector that employs thousands of Jamaicans. We're changing the incentive structure and we believe the industry is fully capable of responding to it. To the Jamaican public, I ask you to consider, there's hardly a family in this country that has not been touched by diabetes, hypertension, or obesity. These are not distant statistics," she stressed.  

 

The government projects to collect $10 billion from the tax on sweetened beverages. 

 

And following concerns raised by local manufacturers on the increase in the environmental levy, the Finance Minister on Tuesday announced a change in the collection of the levy. 

 

The Jamaica Manufacturers and Exporters Association (JMEA) had warned that the government's decision to expand the environmental protection levy to 100% of manufacturer's sales, up from 75 per cent, could weaken the competitiveness of locally produced goods and give imported products an advantage. 

 

The change, introduced as part of the government's 2026-27 fiscal package, is expected to generate about $3.6 billion in additional revenue. 

 

But speaking in the Parliament on Tuesday afternoon, Mrs. Williams said the government is making an adjustment to the levy following discussions with manufacturers. 

 

"The manufacturers raised a legitimate concern that this change would place local manufacturers at a disadvantage relative to importers on whom the environmental protection levy is applied to CIF value, which naturally excludes the distribution margin that is embedded in the selling price. When the 75 per cent base for manufacturers was introduced in 2015, Madam Speaker, it was deliberately designed to put domestic producers on a level footing with importers. 

 

"Madam Speaker, we're therefore retaining the 75 per cent of sales base for manufacturers. However, Madam Speaker to maintain revenue neutrality with the retention of the 75 per cent manufacturer's base, we'll have to increase the environmental protection levy rate modestly from 0.8 per cent as previously announced to 0.85 per cent for both manufacturers and importers. Madam Speaker, I want to be explicit on the fiscal position. Both of these changes have been carefully calibrated to be revenue neutral," the Finance Minister announced.