THE Government should work hand in hand with the Maluti Mountain Brewery (MMB) before imposing the proposed 15 percent levy on alcoholic products.
Oct. 21, 2021
2 min read
Both Govt & MMB must reach common ground to avoid running the brewer out of business
MMB Managing Director, Sesupo Wagamang
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Cooperation between the two institutions will go a long way towards reaching a common ground on how best to deal with the arguments involved.
For its part, the Government contends that the introduction of the tax will reduce the high consumption of alcoholic products to acceptable levels. It further argues that the prevailing excessive use or abuse of the said products without doubt contributes to numerous socio-economic perils, which mostly affect public health in adversarial ways.
Its further contention is that imposing the obviously undesirable levy will also standardise the prices of alcoholic drinks sold in towns along the borders of Lesotho and its only neighbour, South Africa.
While the proposed levy is projected to generate revenue of M200 million annually, the MMB on the other hand is of the mind that the Government stands to lose M800million in revenue in the next three years in the event the levy is introduced.
The country’s largest brewer further suggests that the Government is under extreme pressure from the International Monetary Fund (IMF) to introduce the levy, not only on alcohol but also a 30 percent tax on tobacco products.
While the IMF remains a financier of many low-income countries including Lesotho, the Government should not keep a blind eye on real issues on the ground by imposing a levy that would in the end see the brewing company struggle to make ends meet.
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In a move to push for stronger collaboration, the brewing company has outlined a series of solutions that might possibly assist the Lesotho Government increase revenue, other than impose a levy that would only generate a measly M200 million on an annual basis.
The brewer has proposed more lucrative deals with the Government that are likely to generate revenue of over M1.6 billion in two years in the event the levy is not introduced.
But if the levy is forcefully implemented, the same Government might not even be able to realise the projected M200 million because the MMB business would definitely decline, the brewer suggests.
That means the company would have to find alternative means to stay in business like retrenching its staff and perhaps even compromising the quality of its products among others.
It goes without saying that a compromise has to be reached by both parties in order to avoid a situation that might end up bringing one of the country’s cash cows to its knees if the issue of the sin tax persists.