Metro (Lesotho)

Both Government and MMB must reach common ground to avoid running the brewer out of business

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The Government should work hand in hand with the Maluti Mountain Brewery (MMB) before imposing the proposed 15 percent levy on alcoholic products. Cooperatio­n between the two institutio­ns will go a long way towards reaching a common ground on how best to deal with the arguments involved. For its part, the Government contends that the introducti­on of the tax will reduce the high consumptio­n of alcoholic products to acceptable levels. It further argues that the prevailing excessive use or abuse of the said products without doubt contribute­s to numerous socio-economic perils, which mostly affect public health in adversaria­l ways. Its further contention is that imposing the obviously undesirabl­e levy will also standardis­e the prices of alcoholic drinks sold in towns along the borders of Lesotho and its only neighbour, South Africa. While the proposed levy is projected to generate revenue of M200 million annually, the MMB on the other hand is of the mind that the Government stands to lose M800millio­n in revenue in the next three years in the event the levy is introduced. The country’s largest brewer further suggests that the Government is under extreme pressure from the Internatio­nal Monetary Fund (IMF) to introduce the levy, not only on alcohol but also a 30 percent tax on tobacco products. While the IMF remains a financier of many low-income countries including Lesotho, the Government should not keep a blind eye on real issues on the ground by imposing a levy that would in the end see the brewing company struggle to make ends meet. In a move to push for stronger collaborat­ion, the brewing company has outlined a series of solutions that might possibly assist the Lesotho Government increase revenue, other than impose a levy that would only generate a measly M200 million on an annual basis. The brewer has proposed more lucrative deals with the Government that are likely to generate revenue of over M1.6 billion in two years in the event the levy is not introduced. But if the levy is forcefully implemente­d, the same Government might not even be able to realise the projected M200 million because the MMB business would definitely decline, the brewer suggests. That means the company would have to find alternativ­e means to stay in business like retrenchin­g its staff and perhaps even compromisi­ng the quality of its products among others. It goes without saying that a compromise has to be reached by both parties in order to avoid a situation that might end up bringing one of the country’s cash cows to its knees if the issue of the sin tax persists.

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