Tokelo Khausela
The Ministry of Finance and Development Planning’s tax-collection arm, Revenue Services Lesotho (RSL), has missed its quarterly target for Value Added Tax (VAT) by about M150 million.
According to the ministry’s quarterly performance report tabled before parliament’s Economic and Development Cluster Portfolio Committee last week, the RSL had been set a quarterly target of M1 068 486 381 following the introduction of the Alcohol and Tobacco Levy Act 2023 early this year, but had only collected M919 140 000, missing the anticipated revenue by a whopping M149 346 381.
The ministry’s VAT target for the 2023-24 fiscal period is M4 869 230 498.
Committee member, Teboho Mataliana of the ruling Revolution for Prosperity (RFP), questioned the ministry on the impact of the levy on the tobacco and alcohol industries, and why the RSL had missed its collection target by that much.
In response, the finance ministry’s Director, Economic Policy, Libakiso Leisanyane, told the committee that the industry was not proving them with “accurate information” to make an informed assessment on the impact of the new law introduced in March this year.
“We are not given statistics on whether or not the levy has impacted or has implications on their business as they claim,” Ms Leisanyane said.
“In March when the law was introduced, the brewery (Maluti Mountain Brewery) and other alcohol entities did not collect levy because they were not familiar with it. It was then that the RSL and the ministry of finance made guidelines on how to collect the levy to enlighten the involved parties.
“By the look of things, we did not collect much in April and May, but
collection for the second quarter will be better. The finance ministry and RSL did a proxy VAT to
compare the impact. From the period of implementation compared to the sales of the previous
period and collection, there was no big difference that would put flesh to the skeleton
being created that businesses are struggling because of the levy.”
Addressing the same meeting, the finance ministry’s Principal Secretary, Rethabile Maluke, said levy dynamics were “a lengthy process”, adding the ministry had presented different scenarios to cabinet and assured government that revenue-generation by the Alcohol and Tobacco Levy Act, 2023 would be substantial.
“We need time to gather all the accurate information to make an analysis and it takes time,” Ms
Maluke said.
However, the chairperson of the economic cluster, Sello Hakane of the RFP, who had been observing the meeting quietly, interjected at this point and accused the ministry of not taking the assessment seriously.
“Businessmen can predict the loss of revenue instantly when things go south. So it is paramount to access adequate information to make an informed analysis on the industry without waiting for long periods.
“What will we report to cabinet if you cannot explain to us effectively the essentials of the
report, take accountability and stop shifting the blame on your counterpart?”
Meanwhile, speaking to the Lesotho Times following the committee meeting and responding to the finance ministry’s statement that it struggled to access statistics on the impact of the Alcohol and Tobacco Levy Act, 2023 on the two industries, Maluti Mountain Brewery Legal and Corporate Affairs Manager, ‘Mapulumo Mosisili, said the ministry had the capacity to make an assessment “without waiting for us to provide data”.
“We pay our taxes to the RSL. They are able see the impact on the difference based on the past data compared to now. But we, as an entity, must be made comfortable to provide data. We ought to know why and what they are going to use it for. The ministry has tools to make the analysis. As to why they are failing to utilise them, that is confusing,” Ms Mosisili said.
“When they want to see the impact of the levy on our industry, they must conduct a study. There is the Bureau of Statistics to use for the data. And they (finance ministry) could do things professionally by writing to us so that we provide them with the relevant information.”