KBL consults govt on alcohol tax

LEKOPANYE MOOKETSI
Correspondent | Friday July 25, 2008 00:00

'We are busy talking to the government to help them understand what the implications are,' said KBL director of Corporate Affairs, Thapelo Letsholo.  He added that KBL and Botswana Breweries share the government's concerns on the harmful effects of irresponsible consumption and abuse. However, he said, while increasing the price of liquor may limit its purchase by some people, it does not address the most pertinent matter of alcohol abuse and associated effects. 

He said the government's proposal assumes that by making alcoholic beverages more expensive per capita, consumption will be decreased and with it the associated problems. But he feels that this development will not solve the problem, if anything, it will exacerbate it. 'As a result, we are opposed to the intervention.'

He said the most compelling evidence against a massive tax hike as an effective policy measure against abuse comes from countries where taxation rates have traditionally been high. He noted that in many cases such as the Nordic countries or Eastern Europe, alcohol consumption and harmful drinking patterns remain high. 'Binge drinking continues as the predominant pattern of drinking, brings with it a range of health and social harms for adults, as well as for young people. The levy route is therefore a blunt tool and does not differentiate between problematic and unproblematic drinking patterns.'

Letsholo said their products continue to contribute positively to the society in numerous ways. Some of the benefits, he said, are economic in nature while others have a direct impact on the society.

He said economic and social benefits include those derived from direct and indirect employment in the manufacture and distribution of alcoholic products. 'The retail, advertising, tourism, hotel, leisure, entertainment and hospitality industries are a significant source of employment and revenue. Alcohol contributes strongly to government revenue in the form of employment creation, taxation and excise duty and represents a significant contribution to the GDP.'

Letsholo said it is very unfortunate and a major disappointment that this development comes at a time when they are engaged in extremely constructive consultations with various government ministries on multi-stakeholder initiatives. 

He said it is disheartening that government has unilaterally targeted a single industry without providing any notice, let alone consultation. He pointed out that the message to potential foreign investors is not encouraging as this development could be viewed as a precedent.

Last when was addressing a Kgotla meeting, Khama announced steps that the government was taking 'to fix' people who drink alcohol. He said there is no need for people to drink beer and if they are thirsty, they should drink water.

Khama threatened that the government will come up with more punitive measures if people continue to drink.

Letsholo said the increased taxation may contribute to harmful drinking patterns of other beverage types, even illicit ones. He said the shift by consumers towards non-commercial alcohol beverages has been shown to contribute to an increase in illicit trade.  

He believes that a government hoping to decrease access to alcohol through high taxes may actually fail in its efforts as non-levied beverages are used to substitute those with levies. 'This develops more problems as non-commercial alcohol is often not subject to the same standards of quality and purity as its commercially produced counterparts.

We consider this to be a regressive form of taxation because everyone, regardless of income level, pays the same monetary amount for the product or service. The burden of such taxes falls more heavily on the lower income population who pay a larger percentage of their income than the higher income population. Increase in alcohol taxes may also lead to increases in theft, illegal cross border smuggling of alcohol and the sale of potential harmful counterfeit products.' 

Letsholo said the impact of this development on the alcoholic beverage industry in the county is major, including the reduction of sales and revenue. 'This will call for a revisit of both our people and brewery re-sourcing model which may result in possible retrenchments. We anticipate a need to re-organise the company to better deal with this development as the viability and profitability of the whole industry is challenged,' he added.

Meanwhile, the publicity secretary of the Botswana National Front (BNF), Moeti Mohwasa said his party condemns the proposed tax. He regretted that bars are going to be closed and people will lose their jobs. 'This would affect their families,' said the opposition official.

Mohwasa said the proposed levy will increase inflation which the government has been fighting to control. 

He said Botswana is a secular country. 'You can't force people to live like Christians. We have diverse interests. When those who do not want alcohol are in power, they should not suppress the people who drink beer,' he appealed. 

Mohwasa blamed the ruling Botswana Democratic Party (BDP) for causing alcohol abuse.  He said the government is failing to provide recreational facilities in villages and people end up entertaining themselves in bars. He said bars are the only places for entertainment in the rural areas. 

He argued that imposing a levy  is not the way to combat the problem of alcohol abuse.
He suggested that government should undertake a study in order to address the problem of alcohol abuse. He said some people drink due to their personal circumstances like unemployment.

Specially Elected MP, Botsalo Ntuane, who has been previously vocal against attempts to control drinking until he was called to order by the ruling party high command declined to comment. 'What do you mean?  What can I say really,' he asked.

Ntuane has been sanctioned by the party leadership for expressing his views after the government implement stringent liquor regulations. He once tabled a successful motion in Parliament that the government should consult with relevant stakeholders before imposing regulations.