Sugar tax leaves a sour taste
The following doubles as a response to the request for consultation on the Bermuda Government’s plans to introduce a sugar tax.
Thank you for the opportunity to submit a response to the Government’s proposal to introduce a sugar tax in September 2018.
I wish to submit this response under four capacities: a small-business owner, professional baker, a low-income mother of three, and a well-informed and educated citizen.
In each of these capacities, I am of the strong view that the proposed sugar tax is well intended yet objectionably bad legislation.
In short, I do not fully support the implementation of the sugar tax and have provided rationale for my position below.
Summary of Consultation
Although this seemingly inclusive public consultative process seeks the opinion of the public on 13 specific questions, there is no avenue of objection to this irrational taxation structure.
I value this democratic society and assume my civic duty to be of the highest personal regard, as I am not only a productive citizen but also raising future voters in addition to enhancing the local economy and providing a vocational outlet for Bermudian culinary and business students.
To be provided with a government-issued public consultation that has skewed the line of questioning to predetermine the resultant opinion is gross injustice at its best.
The implementation of this sugar tax will affect my business, but my overall objection to this tax stems from the absurd rationale of financial penalties levied on corporations to curb the dietary decisions of abusive individuals.
In addition to there being no correlation from any jurisdiction that similar taxes have actually improved overall community health, reduced healthcare costs or even increased the public’s education on dietary choices, this tax is just an example of outdated and debunked “trickle-down” ideology.
The history of financially penalising, or rewarding, one sector in “hopes” of obtaining an obscure, desired enhancement of another is an archaic approach to governance.
With the re-emergence of a progressive-minded government, coupled with a well-educated citizenship, the approach to the legislative process needs to be brought up to modern standards of personal accountability.
Contradictions and Alternatives
The proposition of the tax is to address the obesity and diabetes epidemic within the island’s population. This epidemic is of personal interest to me because of my family history and my personal categorisation of being medically “obese” based on my body mass index.
As a mother, I actively reduce my children’s intake of soft drinks and “junk foods”; as an individual, I’ve developed a healthy diet and increased my exercise programmes; as an employer, I have implemented 90-day health and fitness programmes for my bakery team.
All of these health initiatives allow for the moderate consumption of luxury foods. These initiatives are also empowered by personal decisions based on health and nutrition education, and leadership by example.
Obesity and type 2 diabetes are preventable and in most cases reversible diseases with the main deterrent and/or determinant factor being nutritive education on diet and exercise.
“The goal is not to impose a tax that unfairly targets low-income families, but will encourage better choices at the checkout counter and encourage healthier imports from the wholesalers”.
This seemingly innocuous foundation for a “sin” tax is rather idealistic hyperbole. There is no corresponding evidence from any listed jurisdiction that this “goal” has been sufficiently attained. It is historically proven that any inflated taxation, regardless of its harmless intention, will always adversely affect low-income families.
Article 1.12 of the consultation states that “many companies have already started to import items that offer healthier choices for consumers and this tax will support these efforts”.
Although the valiant efforts of the companies that are being proactively compliant should be supported by the Government, there is no intelligent rationale as to how this tax will do so. The existing “healthy” alternatives are of a higher price point. This new tax will increase the price of “sin” products to a more even price point. This will only serve to level the playing field on “healthy” versus “sin” products without educating the consumer on nutritive values and healthy choices.
I started my bakery because I noticed a lack of naturally produced breads, pastries and snacks. I believe that the decision to resist the easier — and cheaper — route of using pre-mixed dough and batters has contributed to our success.
These pre-mixes, generally used by larger food establishments, have all ingredients, including raw sugars and less healthy sugar alternatives — high fructose corn syrup, etc — in addition to other chemical additives already measured and packaged for production. These mixes and other pre-made or frozen baked goods will not be subjected to any tariff increase, resulting in a far cheaper, unhealthy option compared with the price increases that will have to be levied on locally made bakery items.
On a per-unit basis today, sugar is the most expensive ingredient that Sweet Saak uses, even at its present zero per cent customs tariff.
It also ranks among the top cost drivers in the operation of our business. In fact, sugar represents about 30 per cent of our total cost of goods.
A 75 per cent tax on all sugars — assuming it results in only a 75 per cent increased tariff — will result in a now incalculable inflation of our raw ingredient costs.
Some of these costs “could” be passed on to the consumer, but for reasons set out subsequently, this is not a feasible alternative.
An increase to the costs of our business will result in the business having to make difficult decisions around expenditure, employment and growth. An increase in the cost of sugar will certainly result in the need to consider the longevity of this local productive small business.
We fully recognise and respect the Government’s desire to encourage healthy eating and welcome the news about education initiatives connected to diet and exercise.
We find the Government’s justification for taxing sugar, “ ... due to the name of the tax, as well as the impact this item has on baked goods, etc that lead to unwanted weight gain” difficult to understand.
The Government’s rationale behind including sugar in the tax appears to be an attempt to curb the amount of pastries and cookies that add to the waistline. Simply taxing sugar, however, will not have the desired effect.
As a bakery, one of the key competitors to our business is store-bought, processed and packaged baked goods. At the moment, they are marginally less expensive on a per-unit basis, but, precisely because of our bakery’s use of fresh ingredients, there is a slight acceptance of a higher price.
The Government’s present plan, however, will erode that margin by causing baked goods to be much more expensive than store-bought goods.
The Government’s tax will have the unintended and, frankly, backward consequence of driving its populace towards even worse food alternatives than home-made, baked goods. This is plainly not the Government’s desire, but that will be the effect.
The previous paragraph can be directly implied as our answer to Question 6 of the consultation. We submit that answer as a bakery, but as a food establishment, we are well aware that the proposed drastic increased taxation on raw sugar “food” items will result in the increased production costs of all local food establishments because sugar is already an expensive ingredient cost.
This directly affects not only business overhead, but also low-income families who support local businesses.
Section 6 of the sugar tax consultation categorises the “Monitoring and evaluating the tax” as the “need to compare import data one year after tax is implemented” and “compare costs of the items now with one year after the tax is implemented”.
In understandable legal processing of those data analyses, it is now to be deduced that this “public health initiative” can be analysed only by its fundraising abilities and not by its overall impact on public health, changes in obesity or diabetes, or even the financial impact on small businesses or low-income families.
If the ability of how much money a law can make a government is the only yardstick used to measure its societal necessity, we have a larger systemic epidemic than that of the public diet.
The Government is urged to reconsider this sugar tax as a whole. It will become an impediment to the development of small business at a time when our economy desperately needs job creators, it will incentivise consumers to look to cheaper, imported goods, which contain more additives, dyes, colouring and preservatives, and it will result in a business such as ours having to make difficult decisions to continue to operate.
I appreciate your time and attention to this submission. I sincerely implore the Members of the House of Assembly and Senate to consider the adverse effects this legislation will have on the local economy and small businesses such as ours.
• Kamilah Cannonier is the owner of Sweet Saak Bakery in St George’s