Jamaica’s government has outlined a substantial $1.441 trillion budget for the 2026-2027 fiscal year. This budget includes significant new revenue measures. Finance Minister Fayval Williams announced these changes. This marks the first new tax package in nearly a decade.
The budget aims to address critical recovery needs. Hurricane Melissa caused severe damage across the island. The storm inflicted over US$8 billion in physical damage. This loss represents approximately 41% of Jamaica’s gross domestic product.
A new Special Consumption Tax (SCT) will be applied. It targets sugar-sweetened beverages. This levy applies to non-alcoholic drinks with added sugar. It also covers beverages with other caloric sweeteners. Drinks containing artificial or non-nutritive sweeteners are included. These can be carbonated or non-carbonated. This applies to both local and imported products.
The tax will be calculated per millilitre. The proposed rate is two cents per millilitre. This measure is expected to generate $10.1 billion in revenue. It is set to take effect in the first quarter of the fiscal year. The government states a dual purpose for this tax. It aims for revenue mobilization and public health improvement. Jamaica faces persistent high rates of obesity and diabetes. Sugary drinks are recognized as a key contributor to excess sugar intake.
In total, the government projects nearly $35 billion in new taxes. Other tax adjustments are also planned. The SCT on cigarettes will see an increase. This adds $3 per stick. The new rate becomes $20 per stick. This is projected to raise $1.1 billion.
Special Consumption Tax on alcoholic beverages will also rise. The rate increases from $1,230 to $1,400 per litre of pure alcohol. This adjustment is estimated to yield $1.6 billion. New taxes on digital services are also being introduced. These are expected to earn $4 billion over the next two years.
The tourism sector will experience a General Consumption Tax (GCT) rate hike. The rate will go up to 15% from 10%. However, this change is deferred until April 2027. This provides the tourism industry more time for recovery. The Environmental Protection Levy will also be increased. Its rate will move from 0.5% to 0.8%. This measure is projected to bring in $3.6 billion.
The budget allocates $1.34 trillion for recurrent expenses. This covers essential operational costs like wages and salaries. Capital expenditure for infrastructure projects stands at $99.74 billion. Additionally, the government will continue its drawdown of $11.4 billion annually from the National Housing Trust. This funding is crucial for ongoing fiscal operations. It supports reconstruction efforts following the hurricane.
This comprehensive tax package signifies a notable policy shift. The government highlights its commitment to fairness. They state equity will guide the design of all tax measures. Efforts are underway to protect vulnerable groups. The budget seeks to balance immediate recovery needs with long-term fiscal prudence. This strategy aims to prevent a return to unsustainable debt levels.
However, the new sugar drink levy has drawn some criticism. William Mahfood, Chairman of the Wisynco Group, expressed concerns. He warned the tax might disproportionately affect poorer households. He also questioned its effectiveness in reducing consumption or improving public health outcomes. Discussions about taxing sweetened beverages occurred in Jamaica previously. In 2018, concerns focused on economic impact and policy effectiveness.
Globally, the World Health Organization (WHO) advocates for taxing sugary drinks. Many nations already implement such taxes. The WHO notes that numerous other high-sugar products often escape taxation. Evidence suggests these taxes can effectively reduce consumption. Mexico, for instance, saw a significant drop in sugary drink purchases after its tax implementation. Furthermore, these fiscal policies can encourage greater consumption of healthier alternatives like water and milk. They tend to be particularly impactful for lower-income consumers, who are more price-sensitive.
Jamaica’s government is navigating a complex fiscal environment. The proposed budget is designed to fund essential services and vital reconstruction projects. It also aims to safeguard the nation’s hard-won economic stability. The new revenue measures are central to achieving these objectives. The sweetened drink levy headlines these significant fiscal efforts. This news signifies a critical juncture for Jamaica’s economic future and public health strategy.