Alcohol Prices Surge as Trinidad and Tobago Doubles Excise Duty

Beer lovers in Trinidad and Tobago are feeling the sting of a new government policy — a doubling of the excise duty on alcoholic drinks. The 2025–2026 National Budget has raised the tax from TT$5.14 to TT$10.28 per litre, forcing local producers like Carib Brewery and Angostura to raise prices across several popular brands.

The policy, announced by Finance Minister Dave Tancoo, is part of an effort to boost government revenue and strengthen fiscal sustainability. But the effects are rippling quickly through the market — and raising important economic questions about indirect taxes and elasticity of demand.

Carib’s new prices show clear jumps: Carib and Stag now retail at TT$13, Guinness at TT$22, and Royal Extra Stout at TT$15. According to the company, it tried to absorb some of the tax, but the scale of the increase made that “impossible without risking operations.”

From an economic perspective, this is a classic example of tax incidence — where part of the burden falls on producers, and part is passed to consumers, depending on the price elasticity of demand (PED). For products like beer and rum, demand tends to be inelastic — meaning that even when prices rise, consumption falls only slightly. The comments from patrons support this: even after the hike, most said they would “still buy their favourite drink.”

However, the story also reveals competitive pressures. The tax only applies to locally produced or Caricom-manufactured alcohol, giving imported brands a relative advantage. This could distort market competition and shift consumer demand toward foreign alternatives — a potential leakage of expenditure from the domestic economy.

For the government, the move may bring short-term revenue gains, but if consumption does begin to fall — especially among lower-income consumers — it could also lead to regressive effects, where poorer households bear a larger share of the tax burden.

Ultimately, this case illustrates how government intervention, even when well-intentioned, can create complex trade-offs between fiscal policy, consumer welfare, and market competition. For students, it’s a perfect real-world example of how elasticity shapes the outcome of taxation policies in markets with strong brand loyalty and cultural habits.