MALUTI Mountain Brewery (MMB), one of the SAMiller Africa’s companies and Lesotho’s only brewer, says the Government stands to lose over M800million in revenue in the next three years if it introduces the proposed Tobacco and Alcohol Products Levy Bill, 2020.
Sept. 28, 2021
4 min read
MMB opposes proposed alcohol, tobacco products levy
Maluti Premium Lager produced in Lesotho
- Government stands to lose M800 million in revenue
- Levy intended to control local use of alcohol and tobacco products
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The Government intends to use the bill as an instrument to influence acceptable or normal consumption of tobacco and alcohol products in the country,
This emerged in MMB’s submission on Monday before the Portfolio Committee on the Economic and Development cluster that was tabled before the National Assembly by the Chief Whip, Tlokotsi Manyoko.
In its report, the MMB which is against the proposed levy argues that it was not consulted during the drafting of the bill.
It says the bill should not be introduced in order to secure Government total product taxes from the brewer, preserve jobs and to keep the company sustainable for many years to come.
“The proposed levy would not achieve its intended results, instead the Government will lose M800 million in revenue in the next three years which is almost double the income projected to be collected from the total levy over the next two years from MMB alone,'' the MMB said in its submission.
It also highlights that the 2020 budget statement indicated that Government's projected revenue from the total levy on alcohol and tobacco will be M200million annually, adding that the loss of revenue from MMB alone will be double the anticipated incremental revenue from the levy and will therefore result in a net negative impact for the country from revenue perspective.
Instead, the brewing company insists that the Government must implement the Alcohol and Tobacco Act of 1998 before it can increase the levy.
It says licensed liquor and tobacco dealers will be forced to close their businesses due to high prices, adding that this will enable illegal dealers to benefit.
It further shows that introducing a levy on tobacco products will just make illegitimate stakeholders and illicit companies more active in the market because increasing levy will not necessarily stop people from smoking nor reduce consumption among consumers.
''Raising a levy will be tax upon a tax,” the company says.
It notes that that studies have shown that only 20 percent of local liquor traders are operating legally, therefore, introducing a levy will only worsen the problem of illegal trading.
“The levy will not only affect the sales of registered companies but will also result in the loss of many jobs,” it further says.
Similar sentiments were shared by other stakeholders including the British American Tobacco (BAT), Lesotho Liquor and Restaurants Owners Association (LLROA), Private Sector Foundation Lesotho (PSFL), Lesotho Chamber of Commerce and Industry (LCCI) and South African Alcohol Policy Alliance Lesotho (SAAPA).
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The Portfolio Committee on Economic and Development cluster has recommended that the Ministry of Trade and Industry must enforce the registration of the 80 percent illegal traders who evade tax, adding that the tobacco and alcohol levy should be increased gradually in five years to reach the 15 percent and 30 percent target respectively, subject to economic performance.
It also recommended that local products have to be empowered and favoured by the industry over their foreign products.
MMB’s report is yet to be debated and adopted by the House. LeNA