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Bin alcohol and tobacco levy: industry players

Bereng Mpaki

PLAYERS in the alcohol and tobacco industry have taken their fight to stop the enactment of crippling levies to the Senate.

This after the National Assembly on Tuesday approved the controversial Tobacco and Alcohol Levy Bill, 2021. If passed, the proposed law will result in the implementation of a 30 percent levy on tobacco products and a 15 percent levy for alcohol.

The Bill has since been referred to the Senate for further deliberations and if approved, it will then be taken to the King for royal assent before it becomes law.

However, industry players, who have been fighting the Bill ever since it was first tabled in parliament by then Finance Minister Moeketsi in 2020, are making their final stand against it in the Senate.

They pleaded with the upper house not to approve it until fresh stakeholder consultations are conducted.

The stakeholders, drawn from the Lesotho Chamber of Commerce and Industry (LCCI), Lesotho Liquor and Restaurant Owners’ Association (LLROA), British American Tobacco (BAT), Maluti Mountain Brewery (MMB) and others, on Friday appeared before the Senate to voice their displeasure over the approval of the Bill by the National Assembly.

Should the Senate approve the Bill, drinkers and smokers will be forced to pay more for their favourite products as industry players are likely to pass on the costs to consumers.

When tabling the Bill in the National Assembly in March 2020, Dr Majoro said the ‘sin taxes’ would boost government revenues by at least M200 million annually.

Stakeholders have previously condemned the Bill.

MMB is on record saying the levies would be detrimental to the country as hundreds of jobs could be lost.

It said the government would instead lose dividends and tax revenue as an increase in alcohol prices would mean a sharp reduction in sales volumes and an increase in the smuggling of beverages from neighbouring South Africa.

They reiterated the concerns before the Senate on Friday.

Senator Seeiso Bereng Seeiso then recommended the suspension of the Bill.

“We encourage the suspension of the approval of this Bill pending further and more elaborate discussions across the spectrum so that we get to a point where the government and business are happy with what they are receiving,” said Senator Seeiso, who is also principal chief of Matsieng.

Yesterday, Senate Clerk, Tšeliso Molise, told the Sunday Express that the House will engage other stakeholders before deciding on the fate of the Bill.

LCCI secretary general, Fako Hakane, also told this publication that they had approached the Senate to block the Bill because it would fuel illicit trade in tobacco and alcohol thus “killing the lawful industries”.

He said the levies would also compound the cost burden for customers who were already suffering due to the inflation brought on by the on-going Russo-Ukrainian war.

He said the Bill was ill-timed as it was coming at a time when the alcohol and tobacco industries were just beginning to recover from the low business they suffered over the past two years due to the Covid-19 induced lockdowns.

“We want the Senate to suspend the passing of the bill until thorough stakeholder consultations have been conducted,” Mr Hakane said.

He said MMB, which manufacture alcoholic products, would be forced to close down its factory to import cheaper South African liquor.

Many employees would lose their jobs and the government would lose dividends and tax revenue from MMB as an increase in alcohol prices would mean a sharp reduction in sales volumes and an increase in the smuggling of beverages from neighbouring South Africa, he added.

“The government seems hell bent on collecting revenue via the Bill but we’ve been telling the National Assembly that this will not work.  We have the example of Botswana which failed to generate more revenue from the levies. Instead, it led to an increase in an illicit trade of alcohol and tobacco. The same scenario will play out here, more so because we have porous borders,” Mr Hakane said.

LLROA chairperson, Motseki Nkeane, said wider stakeholder consultations had to ve conducted to map the way forward.

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