Monday, August 8, 2022

Alcohol levy to go up 10 percent

Government has set in motion a process that will see the alcohol levy go up by a further 10 percent.
This follows a meeting President Ian Khama had with the Alcohol Committee on Thursday at which he instructed senior civil servants present to kickstart an internal government process through a cabinet memorandum proposing the increase.

The levy currently stands at 30 percent.

Khama’s decision to increase the levy has, however, not gone without challenge.
A source that was part of the deliberations said there was widespread dissent at the Alcohol Committee meeting.

Concerns were raised that even at 30 percent the levy had proved very unpopular, divisive and counter-productive.

“But it was clear that he was not going to take a no. At the end he [President Khama] put his foot down and called for a cab memo,” said an insider.

The head of Government Communications said other than a pronouncement the President recently made at a Kgotla meeting in Tswapong, he was not aware the government was about to increase the levy.
“Of course, the President has gone on record to say the increase was on consideration,” said Jeff Ramsay, who said he was not a part of the Thursday meeting.

“But if the President has called for a cab memo then that is good because he was basically opening a debate within government between various ministries.”

Dr. Ramsay said he believed senior civil servants would also welcome the opportunity to debate the matter.

A spokesman of Kgalagadi Breweries said his company remained hopeful that measures will be put in place to make sure that the implementation of the levy does not favour outside companies against local manufacturers.

“We have no control over government decisions. However, it is our hope that whatever decisions are taken by government are informed by objective research and insights and that the views and the impact on consumers, retailers and manufacturers have been taken into account,” said KBL director of Strategy, Thapelo Letsholo.

Since government introduced the 30 percent alcohol levy, KBL has been at the forefront of a lobby to convince Government to correct the skewed nature of the levy.

The brewer has since seen its margins go down 30 percent year on year since the levy started, thereby demonstrating a direct correlation between the company’s performance and the levy.
The alcohol levy was also at the centre of reasons that led to a ruling party split that led to the formation of the Botswana Movement for Democracy.

There has been a strong feeling that President Khama was trying to impose his lifestyle on the nation. But alcohol is one of the few areas that Khama has shown a preparedness to go against populist postures.

Even inside cabinet, the levy has wrought divisions with some feeling that it was an unnecessary political risk.

But President Khama has doggedly stuck to his faith that alcohol prices have to be raised above reach – according to him, to save Batswana from self destruction.


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