Price of imported soft drinks from CARICOM could increase, says Fin Sec
Posted: 03/07/2009 - 10:28 AM
Author: Adele Ramos - adelescribe@gmail.com
Leila Peyrefitte, representative of Peyrefitte Brothers, importer of Jamaica’s Busta soft drink in Belize, spoke with our newspaper last week, indicating concerns over the recent report that Belize would adjust its schedule of taxes and duties for CARICOM beverages and expectations of some customers that the price of the beverage is going down. That’s not so, Peyrefitte indicated to Amandala.
Ms. Peyrefitte said that she has received official information that because of the way the duties and taxes are calculated, the price would increase, and not decrease.
In our article titled “Barrow announces: Red Stripe and Heineken to challenge Belikin”, we reported on statements Prime Minister and Minister of Finance, Hon. Dean Barrow had made in the House of Representatives, emphasizing what would happen with Red Stripe and Heineken. The article did not report on how soft drinks and other beverages would be affected, but noted that the price of Red Stripe, coming from Jamaica, was expected to fall, and the price of Heineken from St. Lucia, would fall even more.
Amandala has since sought further clarifications from the Office of the Prime Minister and the Ministry of Finance, which signals a possible decrease in beer prices of up to a dollar, but a possible increase in Jamaican soft drink prices by about a quarter.
On Monday evening, Financial Secretary Joe Waight responded to our queries, explaining the broader effects of the amendments, which he said are due to take effect a month from now, on August 1.
As per our request on Monday, Waight has provided our newspaper with an estimation of the changes in duties and taxes (sum of Import Duty, GST, RRD, and Environmental Tax) for specific categories of imported items from CARICOM. The changes would result from the proposed amendment to the Customs & Excise Act, and the simultaneous lowering of the Revenue Replacement Duty (RRD), via statutory instrument.
Here is the sketch provided to us by the Financial Secretary:
.
| Item |
Unit Size |
Import Duty |
Current Taxes $ |
Proposed Taxes $ |
Change ($) |
| Beer from MDCs |
12 fl. Oz. |
70% |
3.00 |
2.19 |
-0.81 |
| Beer from LDCs |
8.75 fl oz |
0% |
2.39 |
1.33 |
-1.06 |
| Aerated Beverages from MDCs |
10 fl.oz. |
70% |
1.06 |
1.33 |
+0.23 |
(LDC means less developed country; MDC means more developed country.)
Waight cautioned that while he has provided us with basic estimates, the change in the final price to the consumer may be higher or lower than the estimated tax change, depending on whether the sellers adjust their retail margins. But in general, he said, the change in the final price should follow the change in the duties, as indicated in the table.
In summarizing, Waight reiterated that “the duties on beer (from both the MDCs and LDCs) will decrease, while the duties on aerated beverages [which come from the more developed countries] will increase.”
The amendments are being made, Waight said, to comply with CARICOM commitments to harmonize domestic and external tax rates.
Included are mineral and aerated waters, soft drinks, beer, stout and other such beverages. While products won’t carry any import duty if they originate from an LDC in CARICOM, such as St. Lucia, they would bear a 70% rate if they come from an MDC such as Trinidad or Jamaica. The rest of the world outside CARICOM, however, would pay 100% duty, said Waight.
In addition, because Government charges 6.5 cents RRD for each 12 ounces of soft drinks produced locally, the CARICOM products now have to carry that same tax, said Waight, because of the “no discrimination rule” now being applied.
He noted, however, that under the provisions of Article 164 of the Treaty of Chaguaramas (establishing the CARICOM community), an LDC could apply a temporary countervailing duty to items coming from an MDC for a limited period of time to allow countries time to adjust to the transition.
This could only be applied up to 2016, however—meaning that for 7 more years Belize could continue to levy the 70% import duty on soft drinks and beer from Jamaica, though Waight told us that Belize could take the decision to revoke it earlier.
While the changes won’t have much of an impact on GOB’s budget and won’t significantly change Government’s tax revenues, according to the Financial Secretary, he admitted that local producers could take the hit if Belizeans show a preference for the imported products; however, he noted, local producers have an opportunity to become more competitive, and they do have the home advantage.
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