Barbadian economist, Professor Winston Moore is suggesting that the tax on sugar-sweetened beverages be increased at least five times the original amount to tackle the island’s alarming non-communicable disease (NCD) pandemic.
The deputy principal of the University of West Indies Cave Hill Campus does not believe that the doubling of the tax from 10 per cent to 20 per cent this year, March 2022, was not drastic enough to make a significant impact.
Moore called for the duties on sugar-sweetened beverages to be increased up to 50 per cent on Thursday, November 24, during the Barbados Childhood Obesity Prevention Coalition Webinar, which centred on “policy ideals and innovations toward a healthier Barbados”.
we, therefore, need to do is ensure that the tax increase is quite significant…therefore we will see a change in consumption habits
“The obesity rates in Barbados are some of the highest in the entire world. If you look at the obesity rate it is over 30 per cent for all adults in Barbados. If you then include persons that are overweight, it gets to almost 70 per cent of Barbadians are considered or persons in the Caribbean are considered obese and overweight,” Professore Moore remarked during a presentation of his paper which exams changing consumption habits through fiscal policy.
He proposed that the tax be increased and the products under the tax be expanded to include other categories such as dilutables, powders, and crystals.
Moore argued that the price change needs to be drastic to deter consumers, so they would not gradually adapt to the price point to accommodate their consumption habits.
“If I increase the tax or if I increase the price of sugar-sweetened beverages, the consumption of sugar-sweetened beverages will not change significantly….Persons can have a taste for sugar-sweetened beverages and they’re not going to change their habits in any significant way.
“…we, therefore, need to do is ensure that the tax increase is quite significant, so that we have a significant rise in price and therefore we will see a change in the consumption habits.”
The economist also suggested that a tiered structure by applied, where the higher the sugar content in a product, the higher their taxes will be.
“We have a very generic tax approach in Barbados whereby there’s a single tax for products with sugar added, but what you can do is that you can have a higher tax or beverages that have a higher sugar content.
“Say for example, those energy drinks that we see our young people drinking that could attract a higher tier in terms of the tax, and then our drink mixes or flavour crystals, those also can provide some revenue to allow us to reduce the taxes on healthier foods,” he insisted.
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The UWI economics professor added that the increased tax would generate revenue which can be used to subsidise healthier food options.
“What we can do in order to be revenue neutral, we increase the taxes on our one item and then reduce the taxes on healthier alternatives,” he continued.
In addition to this recommendation, Moore advised for the introduction of an innovation tax allowance, which would go towards local manufacturers developing food products and drinks with less sugar and less salt. He stipulated that the innovation tax allowance would be financed by the sweet drink tax.
“You’re using revenue from one area to finance innovation and the good thing about this innovation that might take place is that this also allows those same manufacturers to start exporting those goods. Because if other Caribbean countries implement similar policies, this means that Barbadian manufacturers will be ahead of the games because they would have already stopped these beverages and already developed these foodstuffs as well,” he indicated.
Moore insisted that this was a “double dividend” which would facilitate greater economic activity and contribute to eradicating the country’s NCDs pandemic.
“You are likely to see improved health outcomes, reduced healthcare expenditures, additional tax revenues to support reduced taxes on healthier foods and innovation by our manufacturers,” he stressed.
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