Following the Alcohol and Tobacco Bill 2021 tabling by the Economic Portfolio Cluster Committee at the National Assembly on Monday 27 September, Maluti Mountain Brewery (MMB) would like to place on record that it is does not agree with the imposition of the levy which will see consumers paying 3% and 6% levy on alcohol and tobacco, respectively as recommended by the Committee. This proposed bill will lead to increased costs of our beer products, especially vis-à-vis prices in South Africa. MMB currently pays 8% excise tax on beer produced local, and including VAT of 15%, the inevitable price increase, will lead to decline in volumes, while the industry is battling the economic effects of COVID-19.
MMB also notes that there is evidence that the levies do not produce the intended benefits, of raising revenue, nor do increases in taxation result in decreases in consumption to any significant degree. A recent case in-point is the effect of the alcohol levy in Botswana, whereby the government collected less taxes than anticipated and there were considerable job losses, as volumes declined. This was as a result of government stifling business growth through introduction of an unfavourable policy.
The World economy has been hard hit by COVID-19, and Lesotho is no exception. The textile industry is shedding jobs at a fast pace, and the levy implementation will result in not only the small liquor owners closing their businesses, but job losses at MMB as well, as it looks to revising its business model as sales decline. It is our plea that the Lesotho Government reconsiders its decision on levy implementation as a solution to increase revenue, but rather engage the industry on effective measures that will lead to lasting solutions for both government and the industry.
In an effort to save lives and livelihoods of those benefiting from our value chain and contributing to economic recovery, MMB is also in the process of the rolling out the Smart Agriculture Programme in the Ha Makhalanyane, by supporting small holder farmers access high value seeds, fertilizer, mechanization, accompanied by experienced Mentors to ensure skills transfer. As a business, we are also looking to expand our brewing house to increase local production, which also translates into increased employment. However, the levy introduction places all these good initiatives at risk.
MMB is a Lesotho success story, possibly the most profitable investment for the Lesotho Government. It has contributed over M2 billion in taxes and dividends over the past 6 years and has the potential to add over M1 billion to the fiscus, over the next two years, if no levy is imposed.
MMB is open to engage with all relevant stakeholders on how to improve the lives on Basotho, for the benefit of Basotho, while keeping the company profitable.