- Feels Alcohol and Tobacco Levy is punishing them
- Fears liquor smuggling could soar
- Wants levy law to be held in abeyance
By Thoboloko Ntšonyane
MASERU – Maluti Mountain Brewery (MMB) was at pains early this week explaining to the parliament’s Economic and Social Cluster Committee how the recently implemented Tobacco and Alcoholic Products Levy (TAPL), 2023 has affected them.
Introduced on March 1, this year, this law seeks 15% for alcoholic products and 30% for tobacco products.
Through this bill, the government increased the revenue collection and to “influence acceptable or normal consumption” of tobacco and alcoholic products.
Meanwhile, MMB had since inception of this law during the 10th parliament, resisted it saying it will cause it to downsize staff and trigger the smuggling of alcoholic products from South Africa (SA).
Director Governance Affairs and Stakeholders Relations (Lesotho, Namibia, South Africa and Eswatini) Mdu Lokotfwako told the members of the economic and social cluster committee that this law is making the national brewery worse off.
One of the arguments advanced by the MMB is that this levy has caused the local prices of alcohol to increase, a move it fears poses risk of alcohol smuggling which could negatively affect local businesses growth.
“It appears as though the law is crucifying us who are compliant. If you need the levy, then protect the local companies,” he said.
He continued: “Protect us and protect [our] livelihoods. We are a tried and tested [company]. We have been around for so long.
“We are not opposed to the regulation. We believe it needs to be fair, implementable and evidenced-based. We are having sleepless nights because of this.”
Lokotfwako told the MPs (members of parliament) that their duty is to pass laws that are “progressive” and will encourage economic growth.
The Revenue Services Lesotho (RSL)’s Acting Commissioner-General Mosuoe Mapetla has since indicated that they will start collecting the sin taxes from this month despite the complaints that there are some challenges in regards to implementing the tax.
Countries such as Botswana, Brazil and Turkey had introduced taxes on tobacco and alcohol.
The study conducted by the World Bank says “For alcohol abuse, the dominant school of thought has been that the main problem was alcoholism, and that alcoholism is an addiction characterized by loss of control. It stood to reason that addicts would find a way to drink their fill even if prices rose. A tax amounting to, say, extra dime a drink, is not going to make any difference to people who are already suffering great personal losses for the sake of sustaining their habit.
“Contrary to the assumption that tobacco and alcohol taxes are financially regressive, international evidence shows that the sum of benefits fully offset the additional costs of taxes on consumers- tobacco and alcohol taxes disproportionately benefit lower income households because as sin taxes increase, better health ensues, less money is needed for smoking and alcohol related healthcare services and injuries, and labor productivity improves due to reduced sickness and absenteeism. “
The MMB has promised to work in concert with the government Ministries and other stakeholders in raising awareness against “irresponsible” consumption of alcohol.
The director governance affairs and stakeholders relations showed that in Botswana, Kgalagadi Breweries “could have doubled” in size including hiring more staff had it not been for the imposition of the sin tax.
The MMB has also shown that it is unable to increase the size of its employees owing to these regulations.
Lokotfwako said their clients have also indicated that they experience some challenges in charging this levy.
The incoming committee had advised the MMB to write to it, it will in turn have the meeting where it will invite all other relevant stakeholders to discuss this Bill even though it has passed. And those include RSL, Lesotho Chamber of Commerce and Industry (LCCI), the Ministry of Finance and the Lesotho liquor and restaurant owners’ association (LLROA).
“We understand the frustration that the company is going through because of the implementation of this levy, and we believe that all the consultations were made by the past committee however, we also inherit and take responsibility for the good, the bad and all mistakes that happened in the past. We are the new committee, we will announce perfectly the procedures on our way forward in addressing this issue.
“The levy has been introduced for [the] purpose of tax collection which will in turn revive our economy. It is clear that the results of alcohol and tobacco usage by the people comes back to the government in terms of health matters. It is the responsibility of this government to take care and even pay for medical treatments of all sick people of this country.
“And the same government now has to try and collect from the same products that seem to be the cause of trouble. The government also needs to balance employment, health, and the welfare of the people. The same government still [has] to understand the continuity and growth of business in the private sector,” said the chairperson of the portfolio committee Hon Sello Hakane.
The Chairperson also accused the MMB for “not doing enough” in terms of the corporate social responsibility (CSR) saying they should make the correspondence to the Speaker of the National Assembly, the correspondence which will be forwarded to the relevant portfolio committee which is the economic cluster to deal with the matter, adding that they are open for discussion.
In an interview with this publication, the president of LLROA Nkeane Motseki said their members still face challenges in applying the TAPL.
Reacting to the questions that this publication had sent to them concerning the applicability of this levy, RSL acknowledged that it has noted the challenges with its implementation.
“Revenue Services Lesotho (RSL) has observed that there are some challenges and technicalities related to the proper implementation of the Levy. This notice addresses some of those challenges and technicalities.”
On whether the levy applies to VAT (value added tax) inclusive prices, it says “the law to this effect is that TAPL is not charged on VAT inclusive prices. However, it is important to note that TAPL is charged on all other duties, charges and levies that are payable on importation of products into Lesotho.”
MMB is a privately owned company and the government commands a major stake holding over 50 percent. The company shareholding stands thus: Lesotho national development corporation (LNDC) commands 51.00 percent shares, SA’s AB InBev 39.00 percent, the Ministry of Finance 5.25 percent and Lesotho Unit Trust 4.75 percent.
It boasts one large brewery, four depots and seven appointed distributors working across the country. Currently the company employs just over 264 people.
MMB has remitted in excess of M2.5 billion in taxes between 2016 and 2022.