'Sin taxes' set to go up
Mbongeni Mguni | Thursday April 18, 2019 13:05
Whether the higher duties will result in consumers paying more for their favourite drink or cigarette depends on the level of comfort of the import and distribution giants controlling the bulk of local imported liquor and tobacco trade.
According to the schedule of proposed increases published recently, import duty will rise on alcoholic items of various strengths ranging from fortified and unfortified wine, vermouths, ciders, brandies, gins, liquors, whiskies and rum. Import duty also rises on tobacco products, including cigarettes and cigars, pipe tobacco and other substitutes.
The schedule indicates that on average the import duties of nearly all alcohol products will rise by between seven and eight percent, while that of tobacco products will rise by as much as nine percent. Non-alcoholic sparkling fermented fruit beverages are also affected by the increases.
Beverages spared include traditional African beer and unfortified wine in containers holding two litres or less. Unfortified wine in Botswana refers to whose strength ranges between 4.5 percent and 16.5% by volume.
Liquor traders told BusinessWeek the adjustments were yet to reflect on the Botswana Unified Revenue Service’s system for customs agents, who actually handle the imports. However, the increases were gazetted and put into effect on April 5.
“The revised duties mean those involved in importing the beverages and tobacco products will pay the 35% alcohol levy, VAT and the higher tariff, before putting their mark-up and passing that to consumers,” a finance manager with a prominent liquor distributor told BusinessWeek.
A local tax expert said while the World Customs Organisation, to which Botswana belongs, conducts annual assessments of changes in customs and excise classifications, changes to rates are a national discretion.
“Government has its reasons for the change, but there is no one forcing it to change the customs and excise annually or otherwise.
“There could be issues of raising revenues or addressing social ills,” the expert said.
Both professionals requested anonymity as the process to amend the import duties is yet to be finalised.
The government cut the alcohol levy for the first time in a decade last October in a move that has not fully filtered through to consumers, as liquor traders held up prices in order to recoup losses accumulated in previous years.
The Ministry of Investment, Trade and Industry also relaxed liquor retail operating hours in response to complaints by both traders and consumers.