A review has been undertaken on the current customs and excise duty amounts and changes to the Customs & Excise (Tariffs) (Amendment) Regulations, 2018, were agreed by Executive Council on 20 March 2018.
The review placed importance on ensuring that food and drink which contribute to a balanced diet benefit from lower customs duty. And to afford these positive changes, it was agreed that there shall be an increase to the excise duty to extend the ‘sugar tax’ to other unhealthy foods. This change rewards those who eat a balanced diet and discourages the consumption of sugary products.
From 1 May 2018, the food and drink which will have a reduced customs duty rate of 5%, instead of 20%, include water, sugar-free yoghurt, unsalted butter and olive spread, fruit and vegetables (fresh, frozen and canned without added salt or sugar), unsalted and unsweetened nuts and dried fruit, lentils, legumes and beans. These foods join many others which are already at the lower 5% customs duty rate including eggs, meats, pasta, milk, cream, flour, margarine, cereals and rice. Cheese shall remain at the 5% rate except for processed cheese which will be uprated to 20%.
From 1 May 2018, the ‘sugar tax’ excise duty for carbonated beverages containing at least 15g sugar per litre will increase from £0.75 to £1.00 per litre, adding 8p to a can of fizzy sugary drink. Diet and Zero drinks and carbonated waters, because of their low sugar levels, are exempt. The ‘sugar tax’ shall also apply to fruit juices and concentrates which contain at least 15g sugar per litre. For the fruit juices which are affected by the tax, this puts 24p on a 240ml carton of juice.
The ‘sugar tax’ will also apply to chocolate and chewing gum, except where it is sugar-free, at a rate of £1.00 per kg. This would put 4.5p on a 45g bar of chocolate, 1.6p on a 16g share-bag of sweets and 2p and on a 20g pack of chewing gum. For heavier items, namely biscuits, crisps, sugary cereals, pre-mixed cookie dough, and sugar syrups, the excise duty will be 20p per kilo. This would put 8p on a pack of 400g biscuits; 4p on a pack of 200g Pringles; 9p on a 450g pot of treacle; 10p on a 500g jam. Finally, the excise duty applying to Ice-cream shall be 10p per litre. This would put 1p on a 100ml magnum ice lolly and 20p on a 2 litre tub of ice-cream.
Increasing taxes on unhealthy food choices such as carbonated drinks, fruit juices and concentrates with a high sugar content, confectionary and other foods like biscuits, crisps and sugary cereals will encourage a switch to healthier and cheaper options
Baby furniture (e.g. cots) and biodegradable baby wipes will also reduce from 20% to 5% in line with other baby related goods.
A number of imports related to agriculture, fishing and drinks making will see a decrease in import duty from 20% to 5%. These changes provide further support for industries which directly contribute to export or import substitution and help to improve St Helena’s trade imbalance, as set out in the Sustainable Economic Development Plan.
Finally, in line with previous years, the Customs Duty rate for Alcohol will increase with annual inflation (4.4%) and the Customs Duty rate for Tobacco will increase with inflation plus 1% (5.4%).
All changes will come into place on 1 May 2018, with the exception of the Alcohol and Tobacco duty changes which, as in previous years, will come into force immediately.
Chairperson of the Economic Development Committee, Councillor Lawson Henry, said:
“The Economic Development Committee met several times to consider the proposals to widen the sugar tax and reduce duty on more healthier goods. We also took into account advice from the Health Directorate on the impact high sugar content items are having on health of the nation. At the same time we wanted to strike a balance between increases by ensuring the duty was lowered on healthier goods to lessen the impact on lower wage earners while at the same time ensuring we are able to balance the budget. This is not easily done but I believe we have struck the right balance given the current financial climate.”
Government Economist, Nicole Shamier, added:
“The changes are consistent with the principle to subsidise ‘economic goods’ (items which are positive to the health and wellbeing of the consumer) and tax ‘economic bads’ (items which are negative to the health and wellbeing of the consumer). We have been keen to reduce the duty on many key dietary items to help reduce the pressure of inflation on people’s pockets, but in order to balance the budget, we needed to look at an extension of the sugar tax to do so. All in all, we believe these changes to customs and excise duty provide net benefits to very many people on St Helena.”
A detailed list of changes are outlined in Appendix A: Appendix A – Customs and Excise
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6 April 2018