An­drea Perez-Sobers

Se­nior Re­porter

an­drea.perez-sobers@guardian.co.tt

Head of Cor­po­rate and Reg­u­la­to­ry Af­fairs (CO­RA) Caribbean at the West In­di­an To­bac­co Co Ltd (Wit­co), Ger­von Abra­ham, has raised con­cerns over Gov­ern­ment’s re­cent ex­cise in­creas­es, warn­ing that lo­cal man­u­fac­tur­ers could be dis­ad­van­taged if im­port du­ties are not ad­just­ed ac­cord­ing­ly.

Dur­ing Mon­day’s Bud­get pre­sen­ta­tion, Fi­nance Min­is­ter Dave Tan­coo an­nounced steep cus­toms du­ty hikes on al­co­hol and to­bac­co prod­ucts, which he said are ex­pect­ed to ac­count for 80 per cent of pro­ject­ed rev­enue growth in the com­ing fis­cal year.

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 take im­me­di­ate ef­fect.

Speak­ing dur­ing the T&T Man­u­fac­tur­ers’ As­so­ci­a­tion (TTMA) Post-Bud­get Fo­rum yes­ter­day, how­ev­er, Abra­ham said while the new le­gal no­tices con­firm high­er ex­cise tax­es, there has been no match­ing leg­is­la­tion or guid­ance on changes to im­port du­ties.

“I’m try­ing to get some clar­i­ty on the Gov­ern­ment’s ap­proach,” Abra­ham said.

“Both le­gal no­tices speak to an in­crease in ex­cise, but we haven’t seen any le­gal no­tice in terms of im­port du­ties. Such a shock of this mag­ni­tude could push up black mar­ket ac­tiv­i­ty and il­lic­it trade. We re­main open to di­a­logue with the min­istry to dis­cuss the im­pact fur­ther.”

In re­sponse, Min­is­ter Tan­coo ac­knowl­edged those con­cerns, as­sur­ing man­u­fac­tur­ers that Gov­ern­ment re­mains com­mit­ted to sup­port­ing lo­cal pro­duc­ers even as it seeks to sta­bilise na­tion­al rev­enue.

“There is al­ready a buffer be­tween im­port­ed and lo­cal­ly pro­duced al­co­hol. What has hap­pened now is that the buffer has be­come small­er,” Tan­coo said.

“We took the easy sums first. The in­crease in ex­cise du­ties was the most straight­for­ward to im­ple­ment. In­creas­ing im­port du­ties will take more time, as we must re­view our in­ter­na­tion­al treaties and trade com­mit­ments be­fore mak­ing changes.”

Tan­coo con­firmed that the So­lic­i­tor Gen­er­al is re­view­ing the rel­e­vant leg­is­la­tion and that the ad­min­is­tra­tion in­tends to re­store the buffer “as close as pos­si­ble” once le­gal and diplo­mat­ic hur­dles are cleared.

He em­pha­sised that the ac­tu­al in­crease to con­sumers is min­i­mal.

“When you dis­ag­gre­gate the fig­ures, the im­pact on the in­di­vid­ual bot­tle of beer, for ex­am­ple, is very small,” he said, adding that ex­cise rates have not been raised in many years.

The min­is­ter said the new mea­sures were part of a broad­er fis­cal strat­e­gy to re­duce the deficit while main­tain­ing sup­port for pro­duc­tive sec­tors.

“As hard as it may be, we’re ask­ing those who can to play a greater role,” he said.

“It’s il­log­i­cal to think that any gov­ern­ment ac­tion would aim to sab­o­tage in­dus­try; we’re do­ing the op­po­site. We are en­gag­ing open­ly and want to keep that con­ver­sa­tion go­ing.”

Speak­ing on the is­sue dur­ing the pan­el ses­sion, Wade George, ex­ec­u­tive chair­man of EY Caribbean, de­scribed the in­crease in ex­cise du­ties on al­co­hol and to­bac­co as a pre­dictable yet nec­es­sary pol­i­cy tool, giv­en the coun­try’s cur­rent fis­cal con­straints.

He not­ed that these prod­ucts are dis­cre­tionary goods with well-known so­cial and health costs, and there­fore of­ten serve as a log­i­cal tar­get for rev­enue mea­sures. How­ev­er, George cau­tioned that Gov­ern­ment must act care­ful­ly to avoid un­in­tend­ed con­se­quences.

“While the in­crease in ex­cise du­ties is un­der­stand­able, equal at­ten­tion must be paid to the struc­ture of im­port du­ties, par­tic­u­lar­ly on non-Cari­com prod­ucts,” he said. “If lo­cal pro­duc­ers are to re­main com­pet­i­tive, there must be a cor­re­spond­ing ad­just­ment to main­tain a fair buffer be­tween im­port­ed and lo­cal­ly man­u­fac­tured goods.”

George al­so warned that sud­den tax hikes, if not prop­er­ly man­aged, could fu­el il­lic­it trade and smug­gling, un­der­min­ing both pub­lic rev­enue and le­git­i­mate busi­ness op­er­a­tions.

He urged pol­i­cy­mak­ers to pair the tax mea­sures with strong en­force­ment mech­a­nisms and tar­get­ed an­ti-smug­gling ini­tia­tives.

“Pro­tect­ing le­git­i­mate man­u­fac­tur­ers and pre­serv­ing for­eign ex­change are just as im­por­tant as rais­ing rev­enue,” George em­pha­sised.

Com­ment­ing on this de­vel­op­ment af­ter the con­fer­ence, TTMA pres­i­dent Dale Par­son said Gov­ern­ment must en­sure that any hike in lo­cal ex­cise tax­es is matched by equiv­a­lent in­creas­es on im­port­ed goods to main­tain a lev­el play­ing field for lo­cal pro­duc­ers.

Par­son said while the in­ten­tion be­hind Gov­ern­ment’s move to raise lo­cal ex­cise tax­es ap­pears aimed at bal­anc­ing rev­enue needs and pub­lic health ob­jec­tives, there are re­gion­al trade con­straints that pre­vent im­me­di­ate align­ment on im­port du­ties.

“The in­ten­tion by the Gov­ern­ment with the im­ple­men­ta­tion of the lo­cal ex­cise was re­al­ly to in­crease the for­eign im­port­ed ex­cise on sim­i­lar lo­cal­ly man­u­fac­tured prod­ucts by 100 per cent,” he ex­plained. “The is­sue is that it can­not be done so quick­ly be­cause of the Coun­cil for Trade and Eco­nom­ic De­vel­op­ment (Cot­ed).”

Par­son not­ed that un­der Cot­ed, all Cari­com mem­bers must agree on ad­just­ments to the Com­mon Ex­ter­nal Tar­iff, mean­ing Trinidad and To­ba­go can­not uni­lat­er­al­ly raise im­port du­ties.

He urged Tan­coo to re­vis­it the is­sue and en­sure that im­port­ed al­co­holic bev­er­ages and cig­a­rettes are taxed on the same ba­sis as lo­cal­ly pro­duced prod­ucts.

“If lo­cal ex­cise tax­es go up, then du­ties on im­port­ed prod­ucts should in­crease by an equiv­a­lent per­cent­age,” Par­son said.

“That’s the on­ly way to pro­tect do­mes­tic man­u­fac­tur­ers and pre­serve com­pet­i­tive­ness.”

Par­son added that in the short term, some of the ad­di­tion­al costs will like­ly be passed on to con­sumers. How­ev­er, he be­lieves the broad­er pol­i­cy goal of re­duc­ing al­co­hol and to­bac­co con­sump­tion due to health con­cerns is con­sis­tent with in­ter­na­tion­al trends.

In late 2024, the An­ti-Il­lic­it Trade Task Force (AIT­TF) seized coun­ter­feit cig­a­rettes, al­co­hol, and oth­er con­tra­band prod­ucts in a se­ries of op­er­a­tions, ac­cord­ing to the Min­istry of Trade and In­vest­ment.

The AIT­TF is a pub­lic-pri­vate part­ner­ship unit­ing key agen­cies, such as the Cus­toms and Ex­cise Di­vi­sion, Fi­nan­cial In­tel­li­gence Unit, TTPS, and Crime Stop­pers T&T.

(See Page 12)