THE parliamentary economic and development cluster portfolio committee has expressed reservations on the proposed tobacco and alcohol levy by the government.
The committee this week heard presentations from the Ministry of Finance, the Ministry of Health and the Lesotho Revenue Authority (LRA) officials on the proposed levy.
In March 2020, the Ministry of Finance tabled the Tobacco and Alcohol Products Levy Bill 2020 in parliament to promulgate a law for collecting additional M200 million annually in revenue from tobacco and alcohol levies.
The bill proposes a 15 percent levy on the sale of alcohol and 30 percent on tobacco products.
It also seeks to reduce the health hazards associated with tobacco-related diseases and alcohol abuse by discouraging demand through charging deterrent prices for tobacco and alcohol.
However, the two ministries and the LRA representatives failed to sway the committee, which has already heard presentations from stakeholders who are opposed to the bill.
Lesotho Liquor and Restaurant Owners’ Association (LLROA) said implementing the levy would kill the industry as increasing prices would reduce consumption of alcohol leading to job losses in the retail sector. Maluti Mountain Brewery (MMB) said the levy would result in the alcohol industry declining by 27 percent.
The All Basotho Convention (ABC’s) Bela Bela constituency legislator, Litšoane Litšoane, who is a member of the committee, said it would be better for the government to come up with control measures against alcohol and tobacco abuse instead of imposing a levy.
“We should be focusing on controlling the abuse of these products instead of introducing the levy, especially because the collected finances are likely to be misused by government officials,” Mr Litšoane said.
His sentiments were echoed by Alliance Democrats (AD) legislator for Semenanyane, Tlohelang Aumane, who said the bill must clearly address control measures against the misuse of the two products.
Mr Aumane said while the proponents of the bill say it is meant to control excessive consumption of alcohol and tobacco there was no evidence suggesting that it was just not meant to raise money from taxes.
“For example, one would have expected to see measures like banning smoking in public places and workplaces, etc,” Mr Aumane said.
It is important for the government to balance its interests with those of the stakeholder. He added that he was not convinced that the government has a clear plan to control illicit tobacco and alcohol trade thereby threatening the two sectors.
Mr Litšoane also challenged the government to present a plan demonstrating how it intends to use the collected revenue after implementing the levy.
“I am not convinced that the ministry has a clear plan to address the problem of smuggling due to our porous borders. The smuggling of alcohol into the country continues… I would like to know how the ministry will ensure the successful implementation of the levy given the smuggling problems that we have.
“The issue of the levy has dragged because among other things, stakeholders have predicted its unfavourable consequences like job losses and economic decline if it is implemented. What plans does the government have in place to counter these concerns if they come to pass? Are we prepared for the possible economic fallout,” Mr Litšoane said.
In response, the principal secretary in the Ministry of Finance, Nthoateng Lebona, said the levy is meant to discourage excessive usage of the two products.
“This is serious, we need to deal with the high consumption of alcohol and tobacco by all means necessary.”
For her part, the acting LRA commissioner general ‘Mathabo Mokoko said the introduction of the levy is not expected to have a negative impact on the industry as has been claimed by the stakeholders.
“The levy is meant to be implemented in such a way that the consumer is going to pay 15 percent and not more. The impression that the effect of the levy will result in 60 percent price increase is misleading,” Ms Mokoko said.