Jamaica’s premier producer of alcoholic beverages plans no price increase

KINGSTON, Jamaica – There should be no increase in the retail prices of alcoholic beverages produced by J.Wray & Nephew Limited, Jamaica’s premier producer, despite the increases in the Special Consumption Tax(SCT) announced in Parliament on Wednesday by Minister of Finance and the Public Service, Audley Shaw.

Mr. Shaw said Wednesday that the reversal of Government’s decision to impose General Consumption Tax (GCT) on imported printed material, salt, rolled oats, syrup, fish soup, cock soup, noodle soups, motor spirit and lubricating oils for commercial fishing, would create a $2 billion gap in its revenues, which would be plugged by an increase in the Special Consumption Tax (SCT) on cigarettes, as well as a restructured SCT on alcoholic beverages, except white rum.

But, in a release on Friday, Wray & Nephew Limited said that it will not be increasing the prices of the affected beverages -the Appleton range of rums, Jamaica Brandy and Old Tom Gin.

The company said it hopes that the relief it will receive, as a result of Government’s roll-back of the Customs User Fee on raw material and packaging for goods produced for the local and export markets by 2%, will be sufficient to offset the increase in SCT on those products.

Wray & Nephew said it wishes to pass on this benefit by holding at current levels, the prices of all its branded spirits sold on the local Jamaican market, which includes – the Appleton range of rums, Jamaica Brandy and Old Tom Gin.

David McConnell, Managing Director of the global marketing division, said that the company calculated, carefully, the effect of the increase in the SCT, and balanced it against the roll back in the Customs User Fee relating to raw material and packaging for goods produced for the local and export markets.

“We are happy to be able to pass on the savings from the roll back to the consumer, by holding the prices of our spirits. Naturally, if we are unable to balance this in future, we may have to review the prices at a later date,” Mr. McConnell said.

Mr. Shaw had told the House of Representatives, while closing the 2009/2010 Budget Debate, that in order to replace the $2 billion, which would be lost due to the reversal of GCT, the Government would increase SCT on cigarettes and alcoholic beverages.

The SCT on cigarettes will be increased from $6,000 per 1,000 sticks, to $8,500 per 1,000 sticks, effective Monday(May 11). The estimated revenue yield will be $1.8 billion, but 20 per cent will be remitted to the National Health Fund (NHF), which provides assistance to persons purchasing specific prescription drugs for the treatment and management of chronic illnesses.

A single rate of 25 per cent SCT will be imposed on beer and spirits, except white overproof rum, which will remain at 30 per cent. The flat rate of the Jamaican equivalent of US$0.40 per litre on wines, cordials and liqueurs will also remain. The estimated yield from this measure is $530 million, and the effective date is also Monday, May 11, 2009.

Wray & Nephew, in its release, said it welcomed the greater equality of treatment created by harmonising the rate of SCT payable on most alcoholic beverages at 25%.

“This is well-considered move swept away many of the anomalies of a lop-sided structure that had, historically, accommodated incentive and concession programmes for certain alcoholic beverage producers,” the company said.

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