Government will tomorrow announce a hike in alcohol levy, a move that is likely to dampen the mood of elbow benders ahead of the festive season.
President Ian Khama introduced the controversial alcohol tax in 2008 after becoming the Head of State in an attempt to curb excessive drinking. The levy currently stands at 45 percent from the initial 30 percent, but it go up to 50 percent this coming week as a five percent increase is likely.
Efforts to confirm the exact figure that the levy will be increased with did not bear fruit before going to press as the government spokesperson, Jeff Ramsay said he was still in a meeting.
However, in his State of the Nation address last month, Khama said the levy will be increased within a short period of time. He further claimed that, “Between 2008 and 2011 per capita pure alcohol consumption among adults has declined, although it remains above the regional average”.
He however admitted that notwithstanding this general decrease, there is further evidence that up to a fifth of male and over a quarter of female alcohol consumers in the country drink at hazardous levels, “Underscoring the continued need for outreach and interventions on the part of Government and other stakeholders”. As of July 2013 the government has collected a cumulative total of P 1.16 billion.
Concerns have been, however raised that even at the initial 30 percent the levy had proved very unpopular, divisive and counter-productive. The introduction of the levy has resulted in alcohol producers such as Sechaba Brewery Holdings Limited increasing prices of their products thus impacting negatively on the purchasing powers of consumers.
At the same time, Sechaba’s, which government has a stake on through Botswana Development Corporation (BDC), has over the years raised concerns that the levy is negatively hitting hard on their bottom line profits.
Group Managing Director Johan De Kok confirmed on Thursday the government’s impending plan, which he said has already been communicated to his company. The newly appointed MD said that the hike will weigh heavily on the financial performance of the company, which is listed at the Botswana Stock Exchange (BSE).
The group’s annual reports for the past few years show that since the introduction of the levy in 2008, it has had a significant knock on financial performance as a result of unfavourable trading environment.
When presenting the unaudited financial results for the period that ended 30 September, 2013, to the media on Thursday, De Kok said that despite the fact that group turnover grew by 7 percent, sales volume went down due to excise tax, the levy on alcoholic beverages and periodic price increases.