Local business professor says a new tax at a time of unprecedented inflation will push family budgets in Newfoundland and Labrador to a “breaking point”
St. John’s, NL (April 1, 2022) – With five months until the implementation deadline, the Canadian Beverage Association (CBA) are asking government to pause implementation of the sugar-sweetened beverage (SSB) tax to allow industry and consumers to recover from the pandemic and alleviate inflationary pressures.
Locally owned-and-operated businesses must spend tens of thousands of dollars in up-front investment to update billing systems. Those costs cannot be recouped by the local businesses. This is happening at a time of rising cost pressures, including record-high fuel prices, which are stretching delivery systems.
“The cost of implementing this tax will put pressure on local businesses and the price increases will put pressure on consumers,” said Carolyn Fell, Vice President, CBA. “Since this tax was announced fuel prices have skyrocketed. Local companies and consumers just can’t afford another hit.”
“We have seen costs rise significantly in the province from gas to groceries. To add yet another tax upon a tax will only push people’s budgets to the breaking point,” explained Dr. Tom Cooper of Memorial University’s Faculty of Business. “Timing could not be worse.”
Dr. Cooper has researched the economic, business, and social implications of the sugar-sweetened beverage tax. His study, Proposed Sugar Sweetened Beverage Tax in Newfoundland, and Labrador: A Review of the Business and Economic Implications, concluded:
“The implications to business and the economy with the implementation of the tax will be significant with risks emerging around:
- business model feasibility (e.g., some businesses shutting down)
- logistics (e.g., shipments to smaller rural communities)
- human resources reduction
- as well as significant compliance and operational costs
There is also the potential for a ‘doom loop’ to the soft drink manufacturing and distributing industry – a feedback loop which means each action makes the situation worse for the industry – leading to even more risk for the overall Newfoundland and Labrador economy.”
The financial squeeze of the new tax will also be felt by Newfoundlanders and Labradorians, who are already paying approximately $23 million annually in HST on non-alcoholic and non-dairy beverages, plus $8 million dollars in non-refunded portion of the beverage deposit. The SSB tax, applied in addition to the applicable HST, will increase the cost of a sugar-sweetened beverage by almost 40 per cent. Government estimated an additional $8.7 million in revenue on non-alcoholic beverages from this tax. That is almost $40 million dollars a year in taxes paid to government only on non-alcoholic beverages.
Industry has offered to pay for a comprehensive educational rollout to help raise awareness on more balanced choices
Alternatively, the Canadian Beverage Association (CBA) say industry offered to fund, implement, and measure a made-in-Newfoundland-and-Labrador public education campaign to encourage people to balance their beverage calories in lieu of the tax. This proposal would have cost government nothing to administer and takes no money from the people of Newfoundland and Labrador.
“We stand firm in our commitment to reduce beverage calories in the Canadian diet and have made great strides in recent years without taxation,” says Fell. “We encourage government to consider an inclusive, thoughtful, measurable, and comprehensive public outreach program in lieu of taxation.”
The beverage industry is committed to helping empower Newfoundlanders and Labradorians to make decisions that support balanced and healthy lifestyles, including opting for lower or no calorie beverages.
Sarah Fleming, email@example.com, 709-725-5830
About the Canadian Beverage Association:
The Canadian Beverage Association (CBA) is the national voice of the refreshment beverage industry – companies that craft, package, and distribute the majority of non-alcoholic, non-dairy beverages in the Canadian market. CBA members employ 20,000 Canadians in more than 200 manufacturing, distributing and office facilities located in every province and territory, and are industry leaders in the areas of responsible marketing, calorie education, and environmental stewardship.