A balancing act needed in the Alcohol Levy reduction

Mmegi Editor | Friday October 5, 2018 11:26

This means the levy now will be 35% on the cost of production. This is the first reduction since the contentious levy was introduced in 2008. There were too many problems, which were brought about by the introduction of the levy ranging from loss of business to loss of jobs and for a long time, many wanted the levy to be gone like yesterday.

However, now that it has been cut while government continues to consult on whether to stop it altogether or not, traders should be forced to comply with the current policy. Already, there are echoes from the industry players, the Botswana Alcohol Industry Association (BAIA) that the announcement came as a shock, saying the reduction would cause losses as many were sitting on stock procured at a higher price.

Consumers expect alcohol prices to drop immediately, but there seems to be some resistance from the traders as they claim the reduction is sudden and will have a negative impact on their profit margins as some have stockpiles worth millions.

This should not be a problem for the consumers as it was not when the levy was introduced back in 2008. When the levy was introduced 10 years ago, traders immediately increased commodity prices without a blink. The consumers immediately felt the effects, as they had to spend a little extra to buy alcohol beverages, which had been bought cheaply by the traders before the introduction of the levy.

While it is duty bound to preserve a good environment for businesses to thrive, government should also ensure the protection of the consumers in this case. They say they would need between four and six months notice of government’s intention to lower the alcohol levy in order to protect themselves from losses on their inventories, but they are not mindful that they also made a kill if they had stockpiled during that period when the levy was introduced at the expense of the consumer.

Let it be fair play, otherwise if the traders would not be forced to comply and reduce the prices immediately, it would not serve any purpose to reduce the levy because it serves no purpose. The law must be implemented as it is, with no special dispensations. We urge government to ensure that traders do the right thing and reduce alcohol prices forthwith. 

Today’s thought 

“The time of the amendment of the levy is not right and we previously notified the ministry to delay the amendment until February next year.” 

– Mothusi Molokomme