J Wray and Nephew Limited says the company will suck up the additional tax on alcoholic beverages, and that its customers will not face a price increase.

Instead, the spirits company, which is now majority owned by troubled Trinidad conglomerate CL Financial, its ultimate parent, is banking on the downward adjustments of the customs user fee (CUF) at the ports to offset the special consumption tax.

The CUF is being cut by two per cent on raw material and packaging to be used in local production.

The SCT will now, on average, claim a quarter of revenues for the treasury, but the tax is applied only to products sold inside Jamaica, not those slated for export.

Finance Minister Audley Shaw announced the new 'sin taxes' on cigarettes and alcohol at the close of the Budget Debate, saying they would take effect May 11.

The special consumption tax on cigarettes increased from $6,000 per 1,000 sticks, to $8,500 per 1,000 sticks - expected yield $1.8 billion of which 20 per cent would be directed to the National Health Fund.

A single rate of 25 per cent SCT was placed on beer and spirits, except white overproof rum; while the flat rate of US$0.40 per litre on wines, cordials and liqueurs remains - expected yield $530 million.

The amendments to the special consumption tax have in effect increased the cess on Appleton rums, Wray and Nephew Jamaica Brandy and Old Tom Gin, but it has also normalised the cess on 'most' spirits, J Wray and Nephew said in a statement.

"This 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," said the statement issued under the name of David McConnell, managing director of the global marketing division.

For the white overproof sold under the Wray and Nephew brand, the SCT is higher at 30 per cent. That rate is unchanged from last year, the company said, and so the price of the product would not change.

But J Wray and Nephew also said the tax on overproof rum was 20 per cent above other spirits and beers, providing a bumpy playing field.

"The company remains hopeful that the Government will give some consideration to correcting this anomaly," it said.

McConnell warned that were the company to determine in the future that savings from the CUF were no longer sufficient to offset the SCT, then Wray and Nephew would reconsider an increase in prices on its products.

business@gleanerjm.com