Alcohol levy cut by 20%
Mbongeni Mguni | Wednesday October 3, 2018 13:21
The alcohol levy was previously between 50 and 55% on the final cost of liquor sold in Botswana, depending on the alcohol content of the product.
According to a notice in the current government gazette, the levy will now be 35% on the cost of production, a different pricing mechanism which also reduces the weight on manufacturers and traders.
The reduction comes as government continues to engage Batswana on alcohol regulations and trading hours.
This morning, the Botswana Alcohol Industry Association (BAIA) reacted with shock to the latest announcements, saying the reduction would cause losses as many were sitting on stock procured at a higher price.
“It is a 20% reduction and we are all surprised, more so that we had a meeting with the assistant trade minister last week,” said BAIA chair, Mothusi Molokomme.
“We are still seeking clarity from government.
“We are not saying the reduction is bad, but the approach is not the best for us.”
BAIA members, who represent the country’s largest producers, wholesalers and retailers of alcohol, 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.
Traders said they had stocked up for the traditional peak season that runs from Independence to the New Year.
“At Sefalana, between Independence and Christmas, we carry between P80 and P90 million of liquor stock and if there’s a reduction, we cannot sell that stock at a mark up,” explained Sefalana group managing director, Chandra Chauhan told Goya.
“We would have to take a huge hit on the price we bought the stock for. We need at least four months to liquidate our stock.
“September to December is our peak period and as an industry we usually carry large inventories. It is not the right time to implement any abrupt measures.
“As you had said, you are still consulting but we are saying a notice period is essential.”
In his meeting with the traders last week, assistant trade minister, Moiseraele Goya had told the BAIA that, government would only adjust the levy next year.