By Neo Kolane
The government of Lesotho aims to reduce consumption of tobacco and alcohol products to acceptable levels with an introduction of Tobacco and Alcoholic Products Levy Bill of 2020.
The Tobacco and Alcoholic Products Levy Bill will eventually assist in alleviating a prevailing excessive use or abuse of these products which contribute to several socio-economic hazards which acutely affect public health negatively.
The Bill, when passed into law, will also normalise the price differentials that exist between Lesotho’s towns and those of neighbouring South Africa thereby putting Lesotho’s economy on an equal competitive footing.
The Bill empowers a vendor who sells these products to charge the levy at the rate of 30 percent for tobacco products and 15 percent for alcoholic products, collect and remit the levy to the Lesotho Revenue Authority (LRA).
The levy is charged on the consideration for the products exclusive of Value Added Tax. The person who bears the burden is the final consumer of these products.
The stakeholders who were involved such as Maluti Mountain Brewery (MMB), British American Tobacco and Lesotho Liquor and Restaurants Owners Association explained that they were not consulted during the drafting of the Bill.
However, they said the proposed levy should not be introduced in order to secure government total product taxes from MMB, preserve jobs and to keep MMB sustainable for many years.
“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 2020 budget statement indicated that governments projected revenue from the total levy on alcohol and tobacco will be M200 million annually. The loss of revenue from MMB alone will be double the anticipated incremental revenue from revenue perspective,” the stakeholders said.
The stakeholders also want the government to implement the Alcohol and Tobacco Act of 1998 before they can increase the levy.
“We recommend that the ministry of health should make policies to control substance abuse. We also recommend that the ministry of finance should control the spread of counterfeit products and smuggling which impact on tax collection and also indicate how taxes collected in the industry are used,” they suggested.
They also called on the industry to be granted a grace period of 12 months to start the implementation of projects in agro-inputs and projects diversification with clear milestones regarding sourcing fields and preparing contracts for supply by Basotho farms for manufacturing,
A press statement from Southern African Alcohol Policy Alliance (SAAPA) this week applauds the parliament of Lesotho for passing the Bill stating that alcohol levy for Lesotho is a step in the right direction.
SAAPA Lesotho congratulates government for the step forward with the introduction of the levy on alcohol products.
The statement read that SAAPA Lesotho would motivate that government can go even further by earmarking a percentage of this levy’s to be used for health promotion programmes. This has been successfully done in countries like Thailand where an independent health promotion foundation was established with alcohol levy funds.
The SAAPA Lesotho liaison officer, Mothobi Molefi, said that the Bill communicates the commitment of the Lesotho government to act on their recent signing of the World Health Organisation’s (WHO) Global Alcohol Action Plan 2022-2030.
Molefi said this is a significant Bill which reflects global recommendations made by the WHO to reduce alcohol related harm.
“Since 2010 the WHO has recommended the increase in price of alcohol together with reduced availability and marketing restrictions as the ‘3 best buys’ actions member states could take to reduce alcohol related harm.
“The evidence suggests that an increase in price will reduce consumption and therefore alcohol attributable harm. In addition, increased price will also generate more revenue for government.
“A policy of increased price for alcohol products therefore has double benefit increased revenue and reduced consumption.
“Alcohol attributable harm has social and economic cost to government. These costs were acknowledged by members of parliament during their debate on Tuesday,” Molefi said.
