Newfoundland Implements Canada’s First Soft Drink Tax

In an effort to improve its fiscal health, the Government of Newfoundland and Labrador is implementing Canada’s first tax on sugary soft drinks.

Newfoundland Finance Minister Siobhan Coady told reporters the tax will increase prices on soft drinks with added sugars by 20 cents a litre beginning in September 2022.

The province expects the tax to bring in $9 million a year. The tax will be applied on top of any provincial sales tax that is charged on soft drinks. The new tax, if passed in the provincial legislature, will be the first in Canada to target sugar-sweetened beverages.

The provincial government first announced its intent to tax sweet drinks in its 2021-22 budget last May, but the details had not been worked out.

The tax will apply to beverages containing added sweeteners such as sugar, corn syrup, fructose and agave nectar. Alcoholic beverages will be excluded — they're already subject to extensive taxing and 20 cents a litre is unlikely to decrease consumption.

Chocolate milk is also exempt, as are diet drinks containing artificial sweeteners, infant formulas, yogurt drinks and nutritional meal replacement beverages.

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However, ready-to-drink beverages, concentrated drink mixtures and dispensed beverages like slushies and fountain sodas will all be subject to the tax. Consumers will pay an extra 20 cents per litre for those drinks.

The government says the goal of the tax is to improve residents' health and it fits with the government’s effort to make Newfoundland and Labrador one of Canada's healthiest provinces by 2031.

Coming out of the pandemic, Newfoundland and Labrador’s budget revealed the expectation of a huge deficit of $1.8 billion and of a net debt-to-GDP ratio set to reach 55.7% by the end of the current fiscal year.