Consumers are being told to expect more price increases as new revenue measures take effect on Friday May 1.
The Special Consumption Tax (SCT) on non-alcoholic sweetened beverages is based on sugar content and carries a rate of 22 cents per gram of added sugar.
The Government has estimated that it will earn $10.1 billion from the tax.
The Environmental Protection Levy is being expanded to 100 per cent of manufacturers’ sales and is expected to generate $3.6 billion in revenue.
Economist Keenan Falconer says the immediate rise in prices for some goods is therefore not surprising.
Three companies have so far notified consumers of increased prices, come May 1, when two of the revenue measures will be in effect.
Mr. Falconer, speaking with Radio Jamaica News, said the imposition of the revenue measures has compounded a difficult operating environment for manufacturers and distributors amid increasing inflation and elevated interest rates.
But he said manufacturers of non-alcoholic sweetened beverages should disclose to consumers whether they will cut their sugar content.
“Ultimately, all price increases would eventually get passed on to the consumer in some form regardless of the ability of businesses to absorb their initial impact. Manufacturers should disclose the extent to which the imposition of these taxes has encouraged the reformulation of their products to reflect any decline in sugar content,” he argued.
GraceKennedy has told consumers to expect a nine per cent increase in the price of non-alcoholic sweetened beverages. The prices of other products will also go up.
The company said it is unable to absorb the additional costs from the Special Consumption Tax at this time.
In a notice, the Wisynco Group said its price movements are a mix of the SCT, the rise in the Environmental Protection Levy and higher raw material costs.
Another food distribution company, Seprod Group, had previously announced a two to eight per cent increase in some food items.
In the meantime, Mr. Falconer said the Special Consumption Tax on non-alcoholic sweetened beverages could have the desired consumer reaction, which would negatively affect the government’s revenue projection.
“It is too early to say the precise degree to which these taxes will alter consumption patterns. However, I think the government will have to monitor its fiscal accounts should it need to make any adjustments to its projected revenue intake from these measures,” the economist suggested.