Raphael John-Lall

De­spite the in­crease in some al­co­holic bev­er­ages fol­low­ing the 2026 bud­get state­ment two weeks ago, econ­o­mist Dr Ronald Ramkissoon does not ex­pect to see a de­cline in pur­chas­es, es­pe­cial­ly as the coun­try en­ters the Christ­mas sea­son at the end of next month.

Min­is­ter of Fi­nance, Dav­en­dranath Tan­coo an­nounced a dou­bling of ex­cise and cus­toms du­ties on al­co­holic bev­er­ages in his bud­get pre­sen­ta­tion on Oc­to­ber 13.

Ramkissoon gave these views in an in­ter­view with the Busi­ness Guardian.

“Notwith­stand­ing the price in­crease in al­co­hol in the 2026 bud­get, it is my view that con­sumers would still pur­chase al­co­hol but there is like­ly to be some sub­sti­tu­tion in de­mand with cheap­er prod­ucts like­ly fac­ing a pro­por­tion­ate high­er de­mand. Ex­ist­ing tight bud­gets would like­ly face fur­ther strain.”

How­ev­er, he qual­i­fied that by say­ing that un­for­tu­nate­ly, some SMEs which sup­ply al­co­hol-re­lat­ed ser­vices to con­sumers are like­ly to be ad­verse­ly af­fect­ed.

“Let’s be re­al­is­tic, for bet­ter or for worse, al­co­hol has tra­di­tion­al­ly been an im­por­tant in­gre­di­ent in our so­cial­is­ing at Christ­mas-time, at Car­ni­val and at sev­er­al oth­er fes­tiv­i­ties. While it might be ar­gued that for both busi­ness­es and con­sumers this might be the worst time to in­tro­duce these du­ties, ar­guably there might be no ‘right’ time.”

Speak­ing on the Gov­ern­ment’s move to use in­creased du­ties on al­co­hol to gen­er­ate rev­enue, he said tax­es or du­ties on al­co­hol are cer­tain­ly one “le­git­i­mate way” for any gov­ern­ment to raise rev­enue.

“Part­ly be­cause de­mand for al­co­hol is large­ly in­elas­tic as econ­o­mists would say. This means that a small price change is un­like­ly to make a big dif­fer­ence in con­sumer de­mand. But al­so, be­cause the abuse of al­co­hol has ad­verse con­se­quences on the gov­ern­ment’s purse through health and oth­er costs which are borne by gov­ern­ment. Rev­enues so raised can help to de­fray some costs. Un­for­tu­nate­ly, like any oth­er high-priced com­mod­i­ty, too high a price on al­co­hol can lead to the in­creased use of oth­er sub­stances.”

Fi­nal­ly, he said, “It can­not be overem­pha­sised, that in our so­ci­ety, ed­u­ca­tion and the law have im­por­tant roles to play in pre­vent­ing the abuse of al­co­hol. This is why I would ar­gue that the de­mer­it point sys­tem should be re-in­sti­tut­ed and sup­port groups which help ad­dicts should be sup­port­ed.”

Un­der the new rates, du­ties on rum and spir­its will rise from $79.25 to $158.50 per cent of al­co­hol con­tent; beer from $5.14 to $10.28 by grav­i­ty; and cig­a­rettes from $5.26 to $10.52 per pack of 20.

These in­creas­es took im­me­di­ate ef­fect.

Right af­ter, Carib Brew­ery Ltd and An­gos­tu­ra con­firmed im­me­di­ate price ad­just­ments across sev­er­al of their flag­ship brands.

In re­sponse to the new fis­cal mea­sures out­lined by the Fi­nance Min­is­ter, Carib was the first to an­nounce that, ef­fec­tive im­me­di­ate­ly, con­sumers would pay high­er prices on beers, stouts and malt bev­er­ages, in­clud­ing Carib, Stag, Guin­ness, Roy­al Ex­tra and Mal­ta.

Guardian Me­dia re­port­ed that the head of mar­ket­ing at Carib, Antron Forte, said the com­pa­ny had “no choice” but to act in ac­cor­dance with the bud­get’s ex­cise changes, de­scrib­ing the in­crease as a mea­sured and re­spon­si­ble ad­just­ment made to pro­tect busi­ness sus­tain­abil­i­ty while main­tain­ing af­ford­abil­i­ty.

Un­der the brew­ery’s new sug­gest­ed re­tail prices, Carib and Stag will now re­tail at TT$13, Roy­al Ex­tra Stout at TT$15, and Guin­ness and Heineken at TT$22. Mal­ta and Shandy bev­er­ages will cost TT$10.

Ac­cord­ing to the World Health Or­ga­ni­za­tion’s (WHO) web­site there are both health and eco­nom­ic ben­e­fits for rais­ing tax­es on al­co­hol.

The WHO states that al­co­hol tax­a­tion ben­e­fits both pub­lic health and pub­lic bud­gets and by mak­ing al­co­hol less af­ford­able, high­er tax­es re­duce con­sump­tion and re­lat­ed health harms, while al­so low­er­ing broad­er eco­nom­ic costs such as pro­duc­tiv­i­ty loss­es, so­cial ser­vice ex­pen­di­tures and jus­tice sys­tem costs.

“Ev­i­dence shows that when tax­es form a larg­er share of the fi­nal re­tail price of al­co­hol, gov­ern­ments con­sis­tent­ly col­lect more rev­enue – even when peo­ple drink less; for ex­am­ple, a 10 per cent in­crease in the tax share of al­co­holic bev­er­ages was linked to an av­er­age of €59 per capi­ta in ad­di­tion­al rev­enue. These funds can then be ear­marked and used to sup­port health pro­grammes and so­cial ser­vices.”

Sin tax­es

Econ­o­mist Dr Vanus James told the Busi­ness Guardian that the “sin tax­es,” which are tax­es on items such as al­co­hol and to­bac­co, are usu­al­ly con­sid­ered low hang­ing fruit by gov­ern­ments as they are the sources that are the eas­i­est to tar­get.

“The sin tax­es are the eas­i­est to im­pose be­cause of the in­elas­tic (habit-based) de­mand for the prod­ucts - like al­co­hol and cig­a­rettes. So, if the goal is to raise rev­enue, that would gen­er­al­ly work.”

James al­so re­act­ed to the Gov­ern­ment’s pro­jec­tion that this will ac­count for 80 per cent of pro­ject­ed rev­enue growth in the com­ing fis­cal year.

“Col­lec­tion is a more com­pli­cat­ed is­sue. Both the In­land Rev­enue and Cus­toms col­lec­tions are sub­ject to sub­stan­tial leak­ages. The holes in these in­sti­tu­tions will have to be plugged quick­ly if the tar­gets are to be met, even for the sin tax­es.”

The price in­creas­es for some al­co­hol drinks come as the coun­try heads to the end-of-year Christ­mas sea­son where al­co­hol is usu­al­ly an im­por­tant part of the Christ­mas bas­ket.

James ac­knowl­edged that whether it is the “sin tax­es” or any oth­er types of tax­es, the wal­lets of tax­pay­ers are usu­al­ly af­fect­ed.

“All tax­es neg­a­tive­ly af­fect con­sumers in the sense that they cause un­de­sir­able di­ver­sion of in­comes from one use to oth­ers. On the oth­er hand, if the sin tax tar­gets are met, they will help meet the ex­pen­di­ture com­mit­ments. If those are sen­si­ble com­mit­ments, con­sumers will ben­e­fit; if not, it is a dou­ble wham­my. The bal­ance can­not be cal­cu­lat­ed off­hand.”

No drop in pur­chas­es

Pres­i­dent of the Bar­keep­ers’ and Own­ers’ As­so­ci­a­tion (BOATT) Satesh Moonasar told the Busi­ness Guardian that since prices of some al­co­holic bev­er­ages were raised two weeks ago, he has not seen any sig­nif­i­cant re­duc­tion in pur­chas­es of al­co­holic bev­er­ages.

“I don’t see it af­fect­ing peo­ple’s pur­chas­es.”

When asked if he thinks, there will be a re­duc­tion in de­mand for al­co­hol dur­ing the up­com­ing Christ­mas sea­son, he replied by say­ing that while con­sumers may switch to cheap­er brands, he ex­pects peo­ple to con­tin­ue to buy this im­por­tant item for the sea­son.

“Yes, as I said, peo­ple will buy. Oth­er peo­ple will not buy. They may not buy the amount that they would usu­al­ly buy but they will buy it. So, some peo­ple may look for a cheap­er al­ter­na­tive, while some main­tain what they drink.”

While he ac­knowl­edged that the Gov­ern­ment has to take ac­tion to raise rev­enue which he sup­ports, he ad­mits that rais­ing the price on any prod­uct can have a neg­a­tive ef­fect.

“What I have seen in the past cou­ple of weeks is that there are the cus­tomers who would stick with their brands. How­ev­er, you would see the cus­tomers with a low­er spend­ing val­ue, you would see them us­ing al­ter­na­tive brands, which would be the cheap­er brands. So, as far as I have seen so far, I have not seen re­al­ly a downtick in the pur­chas­ing.”