Tuesday, January 19, 2021

Court defers 30% alcohol levy

The Managing Director of Kalahari Breweries and Botswana Breweries Limited, Lehlohonolo Matsela, on Friday left the Lobatse High Court a happy man after judge Unity Dow granted their request to defer the implementation of the imposition of the 30 percent alcohol levy till the Court has been accorded an opportunity to consider the matter.
“I am happy about the order,” is all the smiling Matsela could say after the order was issued.

Justice Dow set a number of dates in which she would like both parties to file all their arguments.
The alcohol levy was expected to be operational from October 1, 2008 and Assistant Attorney General, Tshepho Motswagole, had asked the judge that it should be implemented on the stated dates as it was based on the prerogative of the Head of State.
The judge agreed to the request by Motswagole that the matter be heard by a panel of three judges.

Kgalagadi Breweries and Botswana Breweries’ case, as outlined in their heads of arguments prepared by their lawyer, senior counsel Jeremy Gauntlet, is that his clients were never given a prior notice of this decision and that they were also not accorded an opportunity to be heard before it was announced.

They also submitted in their heads of arguments that, on 13 August 2008, the Government of Botswana and the Ministry of Commerce and Industry gave notice that they intended to postpone the imposition of a 70 percent levy on alcoholic beverages to afford the Botswana Confederation of Commerce and Industry and Manpower (BOCCIM) an opportunity to make proposals on the “problem of alcohol abuse in Botswana”.
BOCCIM then submitted a proposal but it has become evident that the Government would not depart from their July decision to impose a 70 percent levy.
The Government in September revised the decision by reducing the amount to 30 percent and intended to implement it by 1 October, only to result with the case before the Court.

The lawyer submitted that the state intended to impose the levy by promulgating regulations in terms of Control of Goods Prices and Other Charges Act, in particular under section 3(2), which provides that whenever necessary or expedient to control the wholesale or retail prices of goods, the Minister makes such regulations as appear to him to be necessary or expedient for such purpose.

The regulations, he said, may provide for the imposition of a levy on such items of goods as may be specified and the manner of utilizing such levy.
On the proper interpretation of the Act, Gauntlet submitted that its legitimate purpose is clearly to facilitate and encourage the equitable supply, distribution and trade in goods.

The Senior Counsel submitted that nowhere in the Act is authority conferred for a levy to be imposed as a mechanism to restrict availability and supply of or access to goods, in particular in order to increase the cost of or out price goods as to make them less affordable or unaffordable and least of all when the objective is a moral aversion to the product in question.

The declared purpose of the levy, he submitted, is primarily to deter persons from drinking alcoholic beverages and not to control the prices of goods in the sense contemplated in section 3(2) or to raise revenue from their sale.

The rationale underlying the levy, Gauntlett submitted, is rather that the consumption of alcohol is to be discouraged by all means and at all costs on moral grounds.

He said that the President’s statement in this matter only revokes moral grounds for the imposition of the levy.
He then quotes the President saying,”In any case, I think drinking alcohol is wrong” and that perhaps also marginally revokes economic grounds relating to individual choice when he states: ”We want to prioritize buying food or clothes for your children over buying alcohol which is a waste of money”. Besides the stated grounds, he submitted that it invokes no other grounds and that if there were such grounds the President would have stated them.

The Government, Gaunlett said, has acted beyond their powers and that, as have already been shown, the Act can not be employed for other objectives however socially desirable those objectives may be.

He also submitted that it is evident that the July decision, as related to the quantum of 70 percent levy increment, and now the September decision of reduction to 30 percent have been taken without regard to the possible consequences for Kgalagadi Breweries, Botswana Breweries and the general public.

In this regard Gauntlett submitted the amount of levy, starting from the one of 70 percent then the reduced one of 30 percent, is arbitrary and not rationally connected to the objectives that the government seeks to achieve.
Is it the failure to consider alternative and less intrusive and drastic measures to control what the government regard as excessive consumption of alcohol?

The “unintended consequences” of imposing the levy that are likely to arise, such as unlawful trade in liquor and the substitution of relatively expensive alcohol beverages with less expensive but more potent ones, potentially harmful and unhealthy home made alcoholic concoctions?.
He argued that the levy is likely to place greater burden on poorer people and that it will have the effect of discriminating unfairly against the lower income groups.

He pointed out that the government does not appear to have given proper consideration to the amount of revenue that the levy is likely to generate, the manner of utilizing it and whether such revenue is necessary and can be utilized by the state.

Gaunlett submits that it then follows that at least a prima facie case is made that the decision is unreasonable. This because major industrial producers and suppliers in Botswana, such as the Botswana Breweries and Kgalagadi Breweries, active in Botswana for many years, are confronted with an astonishing increase in the sales prices of their products on the shortest conceivable notice.

This is the second occasion in which the government has been taken to Court on issues relating to consumption of liquor in the country. In the first occasion, the government was taken to Court by Night Club owners who were against the government’s action of drastically reducing their operating hours. In that instance, the government lost the case initially at the High Court and then at the appeal stage.

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