Last Thursday the Private Sector Organisation of Jamaica (PSOJ) held its post-budget seminar with PwC and VM Investments. Since the budget, one of the PSOJ’s key areas of recent focus, working along with the Jamaica Manufacturers and Exporters Association (JMEA), has been the issue of the so-called sugar tax.

The introduction of a Special Consumption Tax (SCT) on non-alcoholic-sweetened beverages (NASB) was projected to yield approximately $10.1 billion in financial year (FY) 2026/27. The tax was originally supposed to be levied at $0.02 per millilitre for any sugary drink, but post-budget debate it was changed to 22 cents per gram of sugar.

Additionally, the increase in the Environmental Protection Levy (EPL) from 0.5 per cent to 0.8 per cent, alongside the expansion of the domestic base from 75 per cent to 100 per cent of sales, was also a point of controversy with the private sector. This was expected to generate approximately $3.6 billion in additional revenue. As a result of private sector lobbying, the latter tax has also been changed post-budget debate, with a reversal to the previous domestic tax base of 75 per cent, combined with an overall slight increase to 0.85 per cent to maintain revenue raised. Revenue estimates for both taxes remain unchanged, however, although there is a one month slower start in the case of the sugar tax.

In his presentation to the PSOJ, PwC Lead Tax Partner Brian Denning noted that the initial tax proposal did not really provide an incentive for manufacturers to reduce their use of sugar as it was imposed on volumes of sugary drinks, irrespective of the amount of sugar. During the debate, Finance Minister Fayval Williams had admitted, of course, that this was for speed and ease of collection. As Opposition speaker on finance Julian Robinson quickly noted, there was a clear tension between the revenue-raising aspects of the measure versus the goal of incentivising public health. However, in his presentation, Denning argued that proposals to achieve improvements through “regulation”, as suggested, have not been very successful, citing the example of the coffee industry.

Instead, he observed, the Government listened, and the solution proposed to tax the amount of sugar is in line with that of many Latin American countries and, notably, the UK and Ireland. In fact, according to a 2025 UK treasury review, the UK managed to nearly halve the sugar in soft drinks.

He also observed that applying General Consumption Tax (GCT) to tourism is controversial because it is a major foreign exchange earner yet it is treated as a local service, subject to GCT because it is consumed locally, rather than a zero-rated export like other foreign exchange-earning exports that are zero-rated to maintain competitiveness.

However, because tourism is price sensitive, it is important to review, when taxing tourism, what proportion of revenues are attributed to the local tourism operator versus overseas and digital resellers.

He added that most tourism-dependent countries in the region, such as The Bahamas, Barbados, and St Lucia, have lower rates than the proposed increase. Moreover, all of the taxes, such as GCT, SCT, Customs duties, Guest Accommodation Room Tax, and travel taxes, need to be considered together, as well as the position of other players, such as Airbnb and cruise ship tourism.

The oil shock and the growth agenda

Since exiting colony status in 1962 Jamaica has done a credible job of achieving political independence. However, it has been just 13 short years since Jamaica took the historic fork in the road that leads to the financial independence that the great patriot and National Hero Norman Manley famously charged a new generation to achieve, in 1969, before he died.

In a number of speeches and specific actions, former Finance Minister Dr Nigel Clarke best articulated the specific actions required for Jamaica to achieve this; for example, central bank independence. However, we are now only at the foothills of the long journey to the mountaintop of economic independence, made much more urgent by the need for resilience in the face of climate change. As PSOJ President Patrick Hylton noted at the PSOJ budget seminar, “Resilience without growth is simply survival.”

The key element of the current strategy, as we mentioned in our column last week, has been to build buffers — through low debt and high foreign exchange reserves — that enable Jamaica to recover quickly from the inevitable and intensifying external shocks. In short, a strategy of financial resilience. The current oil price shock is a stark reminder of the importance of our buffers. While our net international reserves are at historic highs of over US$6.8 billion and can absorb the current price spike, as Minister Williams correctly noted in her budget speech, last year’s oil bill of US$1.8 billion was approximately the same as our total merchandise exports. Sobering indeed.

The energy conundrum

The PSOJ highlighted Jamaica’s heavy dependence on imported fuel — which exceeds 90 per cent, leaving the country vulnerable to global shocks — and called for a clear roadmap for reform, including diversification of the energy mix, expanded use of renewables, improved access to financing for energy investments, and streamlined regulatory processes.

Commenting on the energy issue, economist Gerard Johnson notes, “We have seen the devastating effect that even a short interruption of the supply of imported oil can have on small economies, as well as the macroeconomic impact of sudden increases in price. We also are well aware that our households and businesses pay more than three times more for energy than the price in the United States. We now have an opportunity to reduce that vulnerability by increasing our reliance on energy that is produced in Jamaica from the wind and the sun.”

He adds, “There was a moment of hope last year when the Government announced that the renewal of the JPSCo [Jamaica Public Service Company] monopoly in 2027 would require deep reforms to lower the cost of energy, decrease reliance on imported hydrocarbons, and improve reliability. However, since Hurricane Melissa, that commitment seems less clear.

“We all know that investment decisions are often decided by the cost of energy. It is essential that the Government resumes its drive for reform of the energy sector and that it regain its firm negotiating stance. This is a rare opportunity to reduce vulnerability, increase productivity, and improve living standards.”

Keith Collister