Sugar tax not so sweet for local producers
The new sugar tax could steer customers away from locally made products in favour of international competitors, according to some local businesses.
The Government introduced exemptions for home bakers but small businesses have seen the cost of sugar rise sharply and have had to put up their prices.
Raymond Packwood of Crow Lane Bakery has already received complaints from customers about some of the cost increases and expects more to come as the holiday season approaches.
He said: “Some of the new prices I haven't even put up yet, and I know we are going to get complaints.
“They do that now — they are expecting things to cost the same year to year — but the cost of a major ingredient in their cakes and cookies has increased significantly.”
Mr Packwood does not believe the tax will steer people away from sugary foods, but simply encourage people to buy imported products.
He said: “This is going to increase the price of locally made products, and locally made products are actually better for you.
“What they are doing is making the imported products more attractive. I don't believe that was the intention, but that's the effect.”
Peter Jovetic of Alex and Pete's Artisan Ice Cream raised similar concerns.
He said: “There is a limit to what people will pay.
“If they can go and get Talenti Gelato, Häagen-Dazs or Ben & Jerrys at a price a lot lower, then they will.”
Mr Jovetic argued the tax as written is intended as a revenue generator rather than a means to improve Bermuda's health.
“It's just another punitive tax,” he said.
“The country is broke, and this is just another way to glean some money from the residents.”
He added: “If I thought for one moment that all of the money gleaned from the sugar tax would go towards educating the population, subsidising programmes like share food gardens for our students so they develop a relationship with the food they eat, then I would absolutely support this tax.”
He added that he had also seen some businesses increase the price of products such as coffee which are not subject to the tax.
Mr Jovetic said: “The cost of these sugared items that the tax is on is already being spread on to everything else, which negates the point.”
Bruce and Fred Barritt of beverage importer John Barritt and Sons Ltd said it was too early to tell what the impact of the sugar tax will be on their sales.
The tax came into effect on October 1, but Bruce Barritt said they only increased the price of their products last week.
He said: “There's confusion in the market right now, big stores and little stores, about what they should do. People keep asking us what they should sell our products for. All I can say is what our prices are.
“We have a regular price, a diet price. We had to change the prices of juices because 100 per cent pure juice has 5 per cent duty whereas juice drinks are now 50 per cent.
“We used to have all one price for Welch's juices, but we can't do that now.”
Fred Barritt said that while some stores might differentiate their prices based on what has been taxed, others may not.
He said: “If you're a big store and you can scan things, you can put it in the system that Diet Coke is different.
“In a smaller store you have to remember which is which, what is 100 per cent juice and what isn't. Some may say they will just put one price for everything.”
Fred Barritt noted the sugar tax was one of three legislative changes that have increased the cost of business in recent months.
He said: “Our land tax went up by a five-digit figure. Tens of thousands of dollars more than it was, at the swipe of a pen.
“The payroll tax has also had an impact. It probably helped the staff, given the way the tiers work, but that's all part of the cost of business.”
He added: “At the end of the day, it all comes down to if we make enough to cover our costs and, if we don't, we have to reduce our costs. And our biggest cost is payroll.”
Fred Barritt said the tax may harm sales of sodas for a period of time, but similar taxes elsewhere have not sparked a lasting change.
He also expressed doubts the tax would make a lasting change to health on the island, but Bruce Barritt said it might — if the revenues were put entirely into health education.
“If all the money raised from the sugar tax is used for education — and that's crucial for any initiative, especially when it comes to health — it might,” he said.
Bruce Barritt added that while many have suggested the revenues could be used to reduce the cost of healthy foods, such changes are easier said than done.
He said: “Government did make an announcement in the Throne Speech that they want to drop the duty on fruits and vegetables. That was a drop from 5 per cent to zero, which probably won't make an appreciable difference in the cost chain.
“The reality is all fruits and vegetables are imported, apart from what's grown here, which means we are at the whim of a lot of different factors.
“And with the local produce, how do you tell a local farmer that they need to drop the price on the broccoli they have spent hours, days and weeks growing?”