Jamaica introduces $29.4B in new taxes on sugary drinks, digital services, and more

In the aftermath of Hurricane Melissa, which caused over US$8 billion in physical damages, the Jamaican Government is introducing $29.4 billion in new taxes for the 2026-2027 fiscal year, Finance Minister Fayval Williams announced Thursday in the House of Representatives.

At the centre of the revenue package is a new Special Consumption Tax (SCT) on non-alcoholic sweetened beverages (NASBs), set at $0.02 per millilitre and projected to raise $10.1 billion in its first year. The tax covers drinks with added sugar or artificial/non-nutritive sweeteners, whether locally produced or imported. Examples include $6 for a 300ml drink, $12 for a 600ml, and $40 for a two-litre bottle. Williams stressed the public health aspect of the levy: “The primary objective of this measure is not only revenue mobilisation; it also supports broader public health objectives,” citing the island’s elevated levels of obesity and diabetes.

Other measures include:

• Alcohol and cigarettes: The SCT on pure alcohol will rise from $1,230 to $1,400 per litre, generating $1.6 billion, while SCT on cigarettes increases $3 per stick to $20, projected to yield $1.1 billion. Both measures take effect May 1, 2026. Williams said, “The proposed increase is intended to preserve the real value of the tax and strengthen revenue mobilisation.”

• Digital services: General Consumption Tax (GCT) will now apply to digital services and intangibles supplied from abroad. Williams noted, “Digital services now form a growing share of everyday consumption by Jamaican households and businesses. Many of these services are supplied by non-resident providers with no physical presence in Jamaica, resulting in inconsistent application of GCT under existing arrangements.” The measure is expected to raise $0.3 billion in FY2026-27 and $4.2 billion in FY2027-28.

• Tourism: The concessional GCT rate for tourism activities will rise from 10% to 15% on April 1, 2027, yielding an estimated $11.4 billion annually. Williams explained the delayed implementation: “This increase gives the tourism industry more time to recover from the impact of the hurricane.”

  

• Structural adjustments: Modifications to motor vehicle duty concessions for public officials are projected to raise $1.3 billion, while an increase in the Environmental Protection Levy from 0.5% to 0.8%, along with domestic base expansion, is expected to generate $3.639 billion.

• National Housing Trust transfers: Revenue flows from the NHT will continue at $11.4 billion annually through FY2030-31 to stabilize government income.

Williams framed the budget as a crisis response designed to protect essential public services: “Targeted revenue measures to strengthen revenue performance, safeguard fiscal sustainability, and ensure the Government’s continued ability to deliver essential public services are introduced,” she said, noting that administrative fixes alone cannot close the post-Melissa budget gaps.

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This marks the first new taxes introduced in a decade. Williams remarked, “It took a Category 5 hurricane for that to happen,” adding that the government remains committed to public-sector wage offers and raising the income tax threshold to $1.9 million on April 1, 2026.

The 2026-27 revenue package blends traditional ‘sin taxes’, modernisation of the tax base, and continuation of extraordinary flows from the NHT, aiming to close fiscal gaps widened by back-to-back climate shocks while supporting economic recovery.