The Alcohol Industry, in particular, Maluti Mountain Brewery (MMB) says, hundreds of jobs are on the line if the government implements the 15 percent alcohol levy recommended by Finance Minister Moeketsi Majoro now Prime Minister in his 2020/21 budget speech. Dr Majoro said the levy on alcohol and tobacco would boost government revenues by at least 200 million annually. His sentiments are not shared by MMB director Sesupo Wagamang who said the levy would be detrimental to the country as hundreds of jobs could be lost. In his interview with Lesotho Times Newspaper Mr Wagamang added that the government stands to lose dividends and tax revenue as an increase in alcohol prices would mean a sharp reduction in sales volumes and an increase in the smuggling of beverages from neighbouring South Africa. Moreover, Mr. Wagamang quoted that case of Botswana who used to employ between 1200 and 1400 people. When the changes were made workforce was halved. According to Mr Wagamang, the Botswana industry now only employ about 400 people. . This is why the Botswana government revisited the levy and changed the methodology of charging. “They have also gone and reduced it because they realized it’s not working”, alleged Mr. Wagamang. He claims the results were actually the opposite of what they were trying to achieve then.
Mr Wagamang’s claim is industry rhetoric to stall change. The impact of changes in prices of alcoholic beverages on alcohol consumption and related harm has been more extensively studied than any other potential alcohol policy measure. Generally, an increase in alcohol prices results in a decrease in alcohol consumption, and a decrease in alcohol prices usually leads to an increase in alcohol consumption. ). The percentage of price change impacts different alcohol products differently. The World Health Organisation has since 2010 advocated for increase in price of alcohol for example through taxation, excise levy and minimum unit price. Studies have shown that all drinker types respond to an increase in the price of alcohol and it reduces both acute and chronic harm related to drinking among people of all ages. Furthermore, young people and heavy drinkers in particular respond to price increases – the very groups whose consumption behaviour we want to change.
The WHO position has been reinforced by numerous studies over the years resulting in a general global trend towards not only increased but often more refined methods of taxation. According to the WHO, 82% of Basotho abstained from drinking in 2016. However, of those who drink 63.7% of males and 27.3% of females between 15-19 years old drink heavily. This together with high rates of domestic violence, rape, automobile fatalities, continued spread of HIV, low productivity levels, cannot be ignored any longer at the local liquor industry’s behest.
This is not to say that the alcohol levy should be above debate. In my opinion rather than attempting to turn the clock back with regressive suggestions that the levy be abolished, what should now be considered, in light of both international best practice and ongoing local experience, is how an alcohol levy can be part of a package of interventions together with reducing availability and restricting advertising to create an environment and tip the scale e to achieve the desired social outcome of reducing alcohol harm, more especially among the youth and the economically and socially marginalized.
Media Contact Mothobi Molefi
Country Coordinator: Lesotho