Government's move to lower the initial beer tax in the 2010/2011 Budget will likely keep local beer production competitive to the imported beer making its way in the country - something analysts say is key to the industry.
"There should be a difference in imported beer and domestic beer," said Peter Turnquest, president of the Grand Bahama Chamber of Commerce. "Anywhere you go in the world, domestic beer is always cheaper.
"It helps their situation out."
His statement comes as the government proposes changes to reduce the differential in taxation between domestic and imported beers. Initially, Ingraham announced that the Spirits and Beer Manufacture Act will be amended to provide for the rate of tax on domestic production to be increased from $4 to $6 per gallon.
It's something local brewers were not to happy to hear last week when it was announced. However, the tax rate was increased by $1 instead of $2, bringing the local beer production at $5 and leaving imported beer at $6.
"We had discussions with Commonwealth Brewery and Sands Beers," Ingraham said. "There's no question that it is our belief that the differential between locally-produced beer and foreign beer is too high."
He said a case of Kalik, which is produced in The Bahamas, attracts $7 in taxes while a case of imported beer attracts $18.80 in taxes.
"So a case of Budweiser that comes to The Bahamas for $10 ends up costing $28.80," Ingraham said. "Kalik is sold at $34 a case and imported beer at $40 a case."
He added that Kalik has now graduated from the "government school of subsidy and must now pay duty like everybody else."
"Even though they pay a lower rate, they pay the same rate as manufacturers. So they are graduates of our school come July 1," he added.
That increase is expected to bring in an additional $6 million to the government.
