Sechaba Brewery Holdings Limited has said that its subsidiary, Kgalagadi Brewery Limited (KBL) is close to clinching a deal with the Botswana government over the controversial alcohol levy.
KBL Managing Director Johan de Kok said this week that the BSE quoted company is working closely on a number of solutions and proposals with the Ministry of Investment Trade and Industry on a possible revision of the controversial levy that continue to hit home.
Since the introduction of the alcohol levy by President Ian Khama about seven years ago, government has been increasing the alcohol tax by five percent every year with the intention of reducing harmful impact of alcohol. The levy currently stands over 50 percent.
In his brief to business journalists this week, De Kok said Sechaba decided to approach the government since the annual increase was affecting their profitability.
In 2015, Business Botswana also called for a review of the alcohol levy, saying it is unpredictable and therefore causes inefficiency in business. In its position paper on the impact of levies on doing business, Business Botswana said its main gripe with the alcohol levy was on utilization, management and accountability of its use, as various reports indicate that a sizeable amount of the fund is not targeted at programs linked to the abuse of alcohol.
“It is recommended that the alcohol levy should not be used as a surrogate, or substituted for direct or targeted parliament sanctioned interventions. We believe that more resources should be put on public education rather than focusing on one tool: being the increase of the price of alcohol to control substance abuse,” said Business Botswana.
The organisation further argued that the levy is unpredictable in its determination, which raises questions about its efficiency. Since its introduction in 2008, the levy has increased from 30 percent to the current 55 percent. The Botswana Unified Revenue Service (BURS) has revealed that in terms of gross collection and remission to government, the alcohol levy comes second to the training levy among service levies. The levies include flour levy, alcohol levy, motor vehicle third party insurance levy, transport related levy, training levy and hologram (copyrights) levy. The least contributor is the flour levy. The position paper recommends a review of the alcohol levy and highlights that if it is to continue as part of business, the bulk of the levy, if not all, should accumulate in the consolidated fund so as to address the problem of accountability.
“The opinion posited above does not argue with, and, in fact accepts that the national revenue base needs to be broadened. The private sector view is that greater national efficiency and utility would be gained if some form of consolidation and collection efficiencies and the related utilization can be introduced,” said Business Botswana
Meanwhile De Kok said the outlook for financial year 2017 is optimistic based on the recent stability and predictability of water supply in the country.