Monday, March 4, 2024

Kgalagadi Breweries not impressed by proposed levy on alcoholic beverages

While the alcohol industries and the public in general agree with government’s concerns over the adverse effects of irresponsible consumption and abuse of alcohol by consumers, stakeholders are adamant increasing the price of alcohol would make things worse.

As recently as last week, at a Kgotla meeting in Gabane ,the local media fraternity carried headlines trumpeting president Ian Khama’s bold decision to up the alcohol prices by almost 70 percent come August 1.

But the alcohol industry believes that Prersident Khama’s overtures would not curtail the irresponsibleness displayed by Batswana imbibers.

“Kgalagadi and Botswana Breweries share government’s concerns on the harmful effects of irresponsible consumption and abuse of alcohol by some consumers. However there is evidence that while increasing the price of alcohol may limit its purchase by some people it does not address the most pertinent matter of alcohol abuse and its associated harms,” reads part of a Kgalagadi Breweries statement Friday.
Continued the statement, “The measure assumes that by making beverage alcohol more expensive, per capita consumption will be decreased and, with it, the incidence of problems.

“However this development will not solve the problem. If anything it will exacerbate it.

“The most compelling evidence against a levy as an effective policy measure against abuse comes from where taxation rates have traditionally been high.”
In many of these, such as the Nordic countries, alcohol consumption and harmful drinking patterns remain high.
“Binge drinking continues as the predominant pattern of drinking, bringing with it a range of health and social harms for the young people”.
“The levy route is therefore a blunt and does not differentiate between problematic and unproblematic drinking patterns.”

Assistant manager of Ghantsi Arms Hotel, Koos Aggenbach, contends “the increase would have far reaching negative results”, adding that the tourism sector in the area would “definitely collapse.”

A mother of three, Malebogo Gabaitsiwe at Serowe’s Welcome Bar, said, “I have no problems with Khama’s new style of ruling but the latest development is irrelevant.”

“Everybody embraces his policies but the latest is a bitter pill to swallow. I would be ejected from work because monies would not be coming about to sustain the contract,” laments Gabaitsiwe.

Argues the Kgalagadi director of corporate affairs and strategy, Thapelo Letsholo, “Against this background our products continue to contribute positively to the society in numerous ways, some quantifiable, others less so.
“Some of these benefits are economic in nature while others have a direct and indirect impact on society,” noted Letsholo. “Economics and social benefits include those derived from direct and indirect employment in the manufacture and distribution of our products.”

The retail, advertising, hotel, leisure, entertainment and hospitality industries are significant sources of employment and revenue.

Letsholo strongly believes alcohol contributes to government revenue in the form of employment creation, taxation and excise and represents a significant contribution to the GDP.
Khama’s policy comes at a time when the alcohol industry is engaged in constructive dialogue with various government ministries on multi-stakeholder initiatives to develop and implement targeted interventions to reduce alcohol abuse and the associated harms.

“It is further disheartening that government has unilaterally targeted a single industry without providing any notice let alone consultation with the industry.

“The message to potential foreign investors is not encouraging as this development could be viewed as a precedent.”

Continues the statement, “Increased taxation may also contribute to harmful drinking patterns of other types, both licit and illicit. A shift by consumers towards non-commercial alcohol beverages has also been shown to contribute to an illicit trade, often associated with organized crime and a new range of social problems.

On the government’s intention to decrease access to alcohol through a levy on alcoholic beverages, Kgalagadi Breweries says 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 not lest the service.

“The burden of such taxes falls more heavily on the lower-income population. Increased alcohol taxes may lead in theft, illegal cross-border smuggling of alcohol and the sale of potentially harmful counterfeit products.”
The statement concludes: “The impact of this development on the alcohol beverage industry in Botswana is major, including reduction of sales and revenue.

“This will call for a revisit of both our people and brewery resourcing model which may result in possible retrenchments. We anticipate a need to reorganize the company to better deal with this development as the viability and profitability of the whole industry is challenged”.


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