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In the 2026 national budget, the Government announced plans to introduce an asset tax on banks and insurance companies. It is being presented as a fair way to make large financial institutions contribute more to the economy, especially after years of steady profits. On paper, it sounds like a reasonable idea. But the real question is how it could affect the rest of the country, especially the lower and middle class and small business owners who rely on the banking system every day. The proposed asset tax would be based on the total value of a financial institution’s assets instead of its profits. That means even if a bank earns less in a particular year, it could still have to pay a higher tax depending on the size of its holdings. For the Government, this creates a steady and predictable source of income. It also encourages banks to make better use of their large reserves rather than keeping too much idle cash. While that approach may seem sound from a revenue standpoint, it comes with side effects that are easy to overlook. Banks and insurers are not isolated from the rest of the economy. When their costs rise, they often pass those costs on to customers. That could mean higher banking fees, higher loan interest rates, or increased insurance premiums. For many working people already dealing with rising grocery prices, rent and transportation costs, even a small increase in financial charges can add more pressure to their budgets. Small businesses could also face new challenges. Most rely on access to credit to keep their operations running smoothly. If loan rates or service fees climb because of this new tax, entrepreneurs may find it harder to expand or even maintain their businesses. This is especially worrying for those still trying to recover from the tough years following the pandemic. From the Government’s side, the argument is clear. Large financial institutions have done well in good times and bad. Asking them to contribute a bit more to the public purse can help fund social programmes, education and infrastructure. It also fits into the broader idea of fairness—that those who benefit most from the economy should help shoulder a little more of the cost of keeping it stable. But the challenge is finding the right balance. Trinidad and Tobago’s banking system is small compared to global markets, and its stability depends heavily on maintaining investor trust. If the asset tax is seen as too heavy-handed or unpredictable, it could discourage investment and make banks more cautious about lending. That, in turn, could slow down economic activity at a time when the country needs growth and job creation. Transparency will be key. -People are more willing to accept new taxes when they can see real improvements as a result. If citizens notice better healthcare services, safer roads, or upgraded schools funded by this measure, they are likely to view it as a positive step. Without that visible benefit, public trust could fade quickly. Consultation is another important part of the process. Before any final decisions are made, open discussions with the Central Bank, the Bankers Association and private sector representatives could help shape a fairer version of the policy. There may even be room to create exemptions or thresholds that protect smaller credit unions and community-based institutions that serve ordinary people. The Government’s intention is understandable—to secure a more dependable revenue base and ensure fairness in how the financial load is shared. But the success of the asset tax will depend on how carefully it is designed and introduced. A tax meant to strengthen the economy should not end up weakening the very people who keep it moving. At the end of the day, taxes reflect more than just numbers. They show what a nation values and how it chooses to grow. Whether this new measure brings stability or more strain will depend not only on policy but also on fairness, timing and trust. Aaron Matthew Beharry
