By Nthakoana Ngatane
MASERU – Maluti Moutain Brewery, MMB, says if Lesotho doesn’t impose a levy on alcohol and tobacco it will generate M1.6billion in revenues next year – 8 times more that the M200million that the ministry of finance wants from the levy; and says it will also activate a M150million investment for its expansion to produce and sell more.
But the ministry of finance and the Lesotho Revenue Authority say their priority is to rebuild a nation ravaged by poor health, motor vehicle accidents and domestic violence resulting from the excessive and harmful use of these products. The ministry says it wants people to consume less not more, so it wants to impose a levy to discourage and reduce sales.
These arguments were made at yet another meeting of the parliament economic and development portfolio committee on the alcohol and tobacco levy bill. Industry was represented by MMB, British American Tobacco, Lesotho Chamber of Commerce and Industry and Lesotho Liquor and Restaurants Association.
Finance principal secretary Nthoateng Lebona said while it is important to generate more revenue from the industry, it’s even more important to improve the health of the nation, so ifMMB wants to increase local supply then its expansion is not acceptable.
“He is not talking about exports, he is saying more investment, increase supply because there is higher demand. We are saying for the benefit of this country we need to reduce consumption. There is demand for Maluti (beer) outside this country, I thought they would say that, so let’s note chair that there is divergence there. We have people who are lying in hospital, who have lost lives, maybe it’s an opportunity to call them as well to come and petition for this bill.” Said Lebona
Lebona said Lesotho has the second highest consumption of alcohol on the continent, but MMB Managing Director, Sesupo Wagamang rebutted this saying that per capita South Africa consumes 60litres, Botswana 50litres and Lesotho is one of the lowest at 22litres.
However, Wagamang says the industry is already involved in projects to curb and prevent excessive drinking, especially underage drinking.
He says both the 15% proposed by the ministry of finance and the 3% proposed by the committee in its report to parliament,will increase prices for legal sales, but it will also push consumers to opt for cheaper, illicit alcohol, so consumption won’t decrease but at the same time the government won’t realise the taxes that it wants.
LRA’s Setsoto Ranthocha told the committee that it’s not true that the levy will affect sales because during the lockdown alcohol imports didn’t go down.
But committee member and deputy leader of the Movement for Economic Change, T’sepang T’sita-Mosena put it toRanthocha if that is the case, then it is an indication that the levy won’t discourage people from consuming alcohol.
BAT also warned that if the levy is introduced the already high consumption of illicit and unsafe cigarettes will soar, and the sales of tax-paying traders will decline, so neither harm reduction nor revenue collection will be achieved.
But the tobacco giant’s Nelson Jeque says “We go to the stalls and the retailers to enforce the under-18 prohibition in terms of cigarettes which we run in almost 300 outlets all over the country.”
MMB says instead of a levy, the company is willing to work with the government to devise more projects and campaigns to curb abuse of alcohol, especially underage drinking.
LRA has also explained that the levy won’t be double taxation because it will be charged on the original price of the products, not after VAT is charged.
The committee has adjourned its proceedings for another week, and it has once again instructed the ministry of finance and industry to reach consensus, failing which its report that proposes a 3% for alcohol and 6% for tobacco will pass.