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Twin levies to fuel illicit trade of alcohol, tobacco products – LLROA

Business

Sekete Lesaoana

The implementation of tobacco and alcohol levies is going to fuel a rise in the illicit trade of tobacco and alcohol products in the country.

This will lead to legit businesses facing the prospect of being driven out of business by dealers selling cheaper alternative products through the black market.

This was highlighted by Lesotho Liquor and Restaurants Owners Association (LLROA) following Revenue Services Lesotho’s (RSL) recent announcement that the twin levies were implemented on March 1, 2023.

RSL’s announcement followed the enactment of the Tobacco and Alcoholic Products Levy Act of 2023 in January this year.

The objective of the act is to apply 30 percent levy on tobacco and 15 percent levy on alcoholic products.

The government hopes to use the legislation to influence acceptable or normal consumption of tobacco and alcoholic products, having observed excessive misuse of the two products to the detriment of users.

The act is also expected to increase revenue generation for the government for developmental projects.    

In a recent statement, LLROA said it was disappointed that the implementation of the levies was not communicated to stakeholders timeously.

It said without adequate stakeholder education, the move would leave many traders in limbo.

The association said the tobacco and alcohol levies law implementation came at a time when small traders were still recovering from the alcohol bans during the Covid-19 lockdowns, compounded with the rising costs of living, leaving the sustainability of businesses under threat.

It said there was a real danger that legal businesses would shut down with the addition of the levy. It said there were already numerous traders operating outside the legal system, and they would benefit from the implementation of the levies.

“LLROA has always advocated for better enforcement of laws, to limit the growth of illegal traders, before the Tobacco and Alcohol Levy Products Act is passed and implemented. It is unfortunate the Government did not heed our advice, thus giving further impetus for illegal trading to grow” LLROA said in a statement.

“As LLROA, we are reminded of the wool and mohair saga of the previous government, and it was our understanding that the government of the day would have approached these types of issues differently,” it added.

It urged the government to review the relevant law and come up with actions that will benefit the legal traders in the industry.

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