The Trinidad and Tobago government Monday presented a budget of TT$59.2 billion (One TT dollar=US$0.16 cents) to Parliament acknowledging a fiscal deficit of TT$3.8 billion and announcing a series of tax measures to finance the fiscal package.
The debate on the budget will begin on Friday.
Finance Minister Davendranath Tancoo, delivering his first ever budget to Parliament, said that the fiscal package is ‘more than just an accounting of revenues and expenditures, plans and policies,’ adding it represents a shift towards fairness’.
In his three hours and 15 minute presentation, Tancoo said that for too long, the government’s fiscal policy has been seen as a technical exercise and today ‘we redefine it as a human one’.
According to Tancoo, the Kamla Persad Bissessar administration on assuming offence in April found an economy in trouble and that the preliminary outturn for fiscal 2025 is for a deficit of TT$8.7 billion with revenue of TT$50.6 billion and expenditure of TT$59.3 billion.
‘This shortfall could have been far greater had we not acted swiftly and decisively to continue spending and strengthen revenue streams,’ he told legislators, adding that the budget is based on our oil price assumption for 2026 of US$73.25 per barrel, natural gas price assumption of US$4.25 per million British thermal units (MMBtu).
‘As a result of these commodity price estimates, we expect total revenue TT$55.367 billion, total expenditure of TT$59.232 billion (and) a fiscal deficit of TT$3.865 billion.
Tancoo said that the total estimated revenue comprises oil revenue of TT$11.254 billion, non-oil revenue TT$43.402 billion and capital revenue of TT$0.711 billion, adding that the fiscal deficit is 2.17 per cent of gross domestic product (GDP), which is within the international benchmark of three per cent.
Tancoo said that the government in this fiscal year is allocating TT$2.96 billion to the Tobago House of Assembly (THA, which represents the full five per cent of the national budget. In addition, a further TT$763 million will be spent by various ministries on Tobago.
Tancoo said that in total, then, the allocation to Tobago for the fiscal year 2026 will be TT$3.724 billion, which equates to 6.3 per cent of the national budget.
The finance minister said that the government had also agreed on a several tax measures, noting fr instance that commercial banks and insurance companies, due to their large size, profitability and capitalisation, have reported sustained earnings, high liquidity ratios and strong asset base growth.
He said conservative lending practices and favourable monetary conditions have driven these outcomes.
‘Despite this, the average citizen continues to be subjected to unreasonably high fees and near-zero returns on their savings and investments. Against this backdrop, I proposed to introduce an Asset Levy of 0.25 per cent, which is to be charged against the assets of commercial banks and insurance companies operating in Trinidad and Tobago.’
Tancoo said that importantly, the Asset Levy will not be applied to financial institutions and insurance companies operating under the provisions of the Special Economic Zones Act and that this measure, which is expected to contribute TT$575 million in revenues, will become effective January 1 2026.
Tancoo also told legislators that in recent times, there has been an explosion of unregistered commercial and residential rental properties with many of these landlords avoiding paying their fair share of taxes.
‘This contributes to significant revenue loss and a lack of reliable data to support policy development. The introduction of this Landlord Business Surcharge, based on actual rental income, will broaden the tax revenue base, promoting fairness, transparency and accountability. ‘
He said that the measure requires all landlords to register with the Board of Inland Revenue and pay a one-time registration fee of TT$2,500 and that the surcharge will be 2.5 per cent of the gross annual rental income of TT$20,000.00 or less and 3.5 per cent of the gross annual rental income exceeding TT$20,000.
The measure takes effect on January 1 next year and is expected to yield a minimum of TT$70 million from the one-time registration fee.
Tancoo said that the government is also proposing the introduction of an electricity surcharge as a targeted fiscal measure to address the growing cost of electricity subsidies and promote efficiency in energy use.
The surcharge will take the form of a fixed, bill-level charge of $0.05 cents per kWh for commercial customers and industrial customers.
‘The policy is designed to encourage energy conservation, reduce the government’s subsidy burden and generate a predictable revenue stream. It must be noted that our electricity rates will remain substantially below those of our trading partners.
‘Essential public services such as schools, hospitals and street lighting will be exempted.
At current consumption levels, this initiative is estimated to contribute an additional TT$269 million to revenues,’ Tancoo said, adding that the measure takes effect on January 1 next year.
In his presentation, Tancoo said that the cost of administering and offering public services in Trinidad and Tobago has risen significantly and notwithstanding, many administrative charges, including licence and permit fees and processing charges, have remained unchanged, in some instances, for as long as 30 years.
He said this places additional pressure on the Consolidated Fund and that updating the fee structures in line with the current cost of doing business is therefore necessary to ensure cost-reflectivity, fairness and sustainability, while also safeguarding service quality and enabling modernisation.
Tancoo said that 80 per cent of the projected revenue increases are attributable to Customs Duties on rum and spirits, beer and tobacco products and that the new measures will contribute an additional one billion dollars to revenues, adding that the increase in Customs Duties on rum and spirits, beer and cigarettes will take immediate effect.
Tancoo said that the concession for electric vehicles has been abused with the data showing that significant foreign exchange has been used to import high-end electric vehicles, which attract no Customs Duty, Motor Vehicle Tax and Value-Added Tax.
‘We recognise the importance of electric vehicles in reducing carbon emissions and propose adjusting the applicable taxation regime to preserve relief levels for mid to lower-priced vehicles. Accordingly, I propose the following on vehicles whose CIF value exceeds $400,000, a rate of duty of 10 per cent; VAT of 12.5 per cent; and a tiered rate of Motor Vehicle Tax applicable to the Electric Motor Size will be applied on vehicles whose CIF value exceeds $400,000.
Tancoo said that at current demand, this initiative will contribute an additional TT$40 million to revenues and goes into effect from January1 next year.
The finance minister said that the government is committed to protecting the environment and that single-use plastics contribute heavily to clogged waterways, land and marine pollution, and overburdened waste management systems; ultimately harming public health, biodiversity and the economy.
He said he will introduce a five per cent tax on the CIF value of these products at the point of importation and that the proceeds will be earmarked to support national recycling programmes, waste management initiatives and public environmental education.
Tancoo said in the upcoming fiscal year, the government will establish a state-sponsored Real Estate Investment Trust (REIT), a landmark initiative to democratise state-owned assets, strengthen and diversify our capital market and broaden public participation in national wealth creation.
‘This is another bold step to unlock new avenues of non-debt financing. Through this vehicle, high-value income-generating properties such as land, office buildings and commercial infrastructure will be transferred into a professionally managed REIT’ he said, adding that shares will be listed on the Trinidad and Tobago Stock Exchange, allowing both ordinary and institutional investors to earn regular dividends from real estate.
He said at the same time, the state retains a strategic stake in these assets and that a high-level technical committee will be appointed to guide this process for greater transparency and accountability.
Tancoo said that this position puts Trinidad and Tobago as a regional pioneer in innovative financing and empowers citizens to share directly in the prosperity of the nation.
‘Given the healthy domestic investor appetite, this measure is expected to contribute significantly to the government’s revenue stream,’ he said, noting that in the new fiscal year, the National Investment Fund Holding Company Limited (NIF) will launch a one billion dollar NIF bond.
‘This is yet another opportunity provided by this government to afford ordinary citizens, small businesses and institutions the opportunity to invest and build personal wealth, in a safe, tax-free environment without increasing public debt.’
Tancoo said that the bond will be backed by 21 per cent of the shareholding of First Citizens Group Financial Holdings Limited (FCGFH) valued at approximately two billion dollars, while the government retains indirect and beneficial ownership of the majority of FCGFH at 60.11 per cent.
He said that the bond will be issued in the second quarter of Fiscal 2026.
The government has also announced increased fines for persons not adhering to the laws.
For example, the environment tyre tax moves from three to five thousand dollars, application for registration of pesticides from two to four thousand, driving while disqualified from holding or obtaining a driving permit from zero dollars to five thousand, while careless driving and driving or being in charge of a vehicle while blood alcohol levels exceed prescribed limit will result in an introductory fine of TT$15, 000
‘These increases in penalties will contribute an additional TT$180 million to revenues,’ he said, adding that the government is also removing the motor-vehicle tax concessions for returning nationals
Tancoo said that in January, 2023, the Financial Intelligence Unit issued to the Ministry of Finance its Strategic Analysis Report on the Abuse of the Duty Relief Concession Granted for personal vehicles imported by returning nationals and found that fraud and abuse of duty relief by persons claiming Returning National Exemptions October 2016 – September 2018.
‘To this end, I propose that Customs duty relief and related tax concessions (Valued Added Tax and Motor Vehicle Tax) on motor vehicles imported by returning nationals be removed.
This measure will take effect on January 1 2026,’ he said.
The government has also announced a reduction in the price petrol, liquified natural gas (LNG), the removal of VAT from all machinery and equipment intended explicitly for agricultural use as well as the removal of VAT from a multiplicity of basic food items among other relief measures.