By Nthakoana Ngatane
MASERU – Bela Bela MP and member of the economic and development portfolio committee, Litšoane Litšoane shocked the alcohol and tobacco industry on Wednesday when he said “while the committee has invited stakeholders for another engagement, it won’t change the proposed bill for levies on alcohol (3%) and tobacco (6%), and it will pass anyway.”
He also said the committee doesn’t have the knowledge to make calculations on the impact of the figures it proposed, but it is also not obliged to explain to any of the stakeholders how it arrived at its decision.
At a meeting requested by the Lesotho Chamber of Commerce and Industry, LCCI, Movement for Economic Change deputy leader, Tsepang Mosena, who was chairing the meeting, told industry that the committee was convinced that the ministry of finance must explain how it consulted traders as it was instructed by the committee.
Before making its final recommendation, contained in a report tabled to parliament, the committee instructed the ministry of finance to consult stakeholders and reach consensus with them. The ministry had proposed 30% for tobacco and 15% for alcohol and said it would be charged by retailers to consumers, while industry wants no levy.
The committee says finance went back and told parliament that there was no consensus, so the committee made a compromise decision. But traders who appeared before the committee last week, including Shoprite and Browns wholesalers, say this is not true, they were never invited, let alone consulted.
LCCI, which has attended previous meetings with the portfolio committee, and also represented industry players including Maluti Mountain Brewery and British American Tobacco, say they were invited by the ministry of finance. However, LCCI’s ‘Makali Lepholisa told the committee that the chamber wrote back to finance providing a list of its members including the wholesalers and retailers, who would be affected by the levy directly, but they were never invited.
After hearing this, Mosena called for a short recess, and when the meeting resumed, she announced that the committee had decided to call another meeting of stakeholders to determine if the consultations by ministry of finance were sufficient.
That’s when Litšoane threatened that regardless of the outcome of that meeting, the bill will be passed anyway.
Matlotliso Kolobe, who owns Lereli Enterprises in Ha Abia, and sells alcohol and tobacco, attended last week’s meeting in person. She says Lit’soane’s comment was repulsive: “Ntate Litšoane can’t be part of a decision if he doesn’t understand the implications of it or he is unwilling to understand. How did he decide on imposing the levy in the first place?”
Kolobe says 16 small unlicenced operators have opened around her, and she tried to report them to LRA, but the revenue authority told her to report to the police.
Kolobe says the traders pay bribes to the police and continue operating, and if a levy is imposed, they won’t be affected by the increase in prices.
“I used to sell M15,000 per week, the lockdown brought my sales down to half of that, and now with all the competition around me I hardly sell M3,500 per week. I have reduced my employees from 4 to 2 and I am now at work everyday. So, we want a zero percent levy until LRA can collect from all of us.” Says Kolobe.
Kolobe says when she first opened her business LRA monitored her daily and even spent time in her business to make sure that she was paying all the tax she owed, but now they are turning a blind eye to businesses competing with her.
“LRA and law enforcement should make sure that all traders pay tax , otherwise introducing the levy now will be punishing compliant businesses. We are not afraid of competition, but the law must apply to everyone equally.” She says.
Motseki Nkeane who owns three bars in Ha Thetsane, Qoaling and Ha Makhalanyane, and is a member of the Lesotho Liquor and Restaurant Owners Association, LLROA, has attended three meetings with the portfolio committee, and was waiting for his invitation from the ministry of finance, but it never came.
He says the committee should not be allowed to pass the bill until he is heard.
“This is not the time, there’s no business since the first lockdown in March 2020. I used to buy and sell 22 pallets every week, but now I can hardly sell 10 pallets. I have reduced my employees from 60 people down to only 25. If a levy is introduced, my business will be dead.” says Nkeane.
He wants to ask the ministry of finance and LRA how they plan to level the playing field before imposing a levy, because unlicenced traders who don’t pay tax are mushrooming every day.
“Our research shows that only 20% of alcohol businesses pay tax. People have opened bars in places that don’t qualify to be bars, without licences. When we report to the police they pay them bribes. Smuggling is another problem. So, LRA must first get everyone to pay tax, otherwise those who don’t pay tax will sell at even lower prices than us who are compliant.”
Nkeane heard about Litšoane’s comment from fellow traders and said “If this bill passes, I will know that parliament doesn’t take us seriously. We told them that finance and LRA didn’t’ consult us even after the committee told finance to consult us. We were surprised when they said they have tabled the bill.”
Police spokesperson Mpiti Mopeli says the allegations that police are receiving bribes to keep illegal traders open have not reached his office, and he encourages traders to report such incidents to the district heads of the police or directly to the office of the commissioner.
LRA says it will make representations in parliament on Wednesday even though it doesn’t understand why it’s being called back.
Head of public relations Pheello Mphana says: “As far as we are concerned the committee listened to submissions from all parties and made a decision, so we don’t know what it is that has triggered this meeting as we thought we have passed this stage”
Mphana maintains that LRA did all the consultations it had to do, but hearing stakeholders is the responsibility of the committee.
“When you develop a policy you do consultations which LRA did. But when it is time to make a decision those consultations are conducted by the committee, not LRA, and every interested party is free to approach the committee to make their submissions. The parties simply don’t agree and the committee has to make a decision.” says Mphana.
This contradicts the committee position. It says it made it clear to LRA and the ministry of finance who are proposing the law, that it is their responsibility to call all stakeholders before making their final submissions. The committee says LRA and the ministry of finance went back to parliament and told it that the consultations were done but no consensus was reached.
Lesotho Express sent requests for clarification to the principal secretary of the ministry of finance Nthoateng Lebona, but she hadn’t responded when we published.
What is clear, is that industry was caught between the parliament committee and the proposers of the bill who both believe business should be consulted, but none of them think it’s their responsibility. What remains to be seen is if Litšoane will still be adamant that the bill will pass anyway.