The 'Steele Doctrine' could well apply to proposed sugary drinks tax

Thursday, June 13, 2019

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Mr Marcus Steele, Carreras Limited managing director, is no doubt looking out for his company's well-being, but his warning about the likely consequences of an additional tax on cigarettes could apply to the proposed tax on sugary drinks.

Of course, we in this space do not hesitate to throw our support behind the Health Ministry's campaign to reduce sugar intake, especially among children.

The science has clearly established the obvious dangers to health from over consumption of sugar.

What we are concerned about is the proposal for yet another tax that, fly high, fly low, will be passed onto non-consumers, whether directly or indirectly, through price increases on other products handled by the same distributor.

A tax on sugary drinks, if it goes forward, should by no means be a first resort. That is seeking the easy way out, as is our wont in this country.

The Health Ministry has indicated it will be turning next to the reduction of consumption of fatty foods. Does that mean another tax on fatty foods?

Indeed, if each time the ministry comes up with a new campaign about other products deemed to be bad for the health, and that would include salt, a new tax is to be imposed, where will the line be drawn?

Is there no limit on the Government's appetite for taxes? Beyond all that, we wonder how the Government is going to effectively police the sale of sugary drinks and collect the taxes from individuals who mix sweet drinks for sale through informal outlets.

To get around higher cost of taxed sugary drinks, astute vendors (of which there are not a few) will mix their own drinks, for example, lemonade and local products like 'suck suck' with as much sugar as they choose.

That aside, there is something to be said for Mr Steele's caution about an additional tax on cigarettes, at a recent press conference to relaunch Carreras' Youth Access Prevention (YAP) campaign, geared at preventing cigarette sales to minors.

According to Mr Steele, Carreras, Jamaica's largest cigarette trader, is reporting a 30 per cent cut in sales of its legitimate product due to the influx of illicit cigarettes which evade taxes and so are cheaper.

“Some 100 million sticks have been lost to the illegal products, resulting in $6 billion lost across the supply chain. Everybody loses. The Government loses tax income, retailers lose money, and Carreras loses profits due to the last tax increase,” said Mr Steele.

In 2017, he said, the Government raised taxes on cigarettes from $14 to $17 per stick, with the intention of raising some $876 million of additional revenues, but lost an estimated $1 billion because consumers switched to the illegal cigarettes.

Ironically, the switch from regular cigarettes to the bogus ones — which is as much as 50 per cent of cigarette sales in the Kingston Metropolitan Area (KMR) — has come with an unforeseen health risk, Carreras warns.

The illicit cigarettes do not show health warnings and avoid other regulatory requirements. A sugary drinks tax may be well-meant. But as we well know, the way to hell is filled with great intentions.

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