Parliament’s Economic and Development Cluster Urges Halt to Proposed ‘Sin Tax’ Hikes
Parliament’s Economic and Development Cluster has recommended that the government halt the proposed increases in levies on tobacco and alcoholic products, citing potential economic harm and urging further stakeholder engagement. The recommendation comes amid ongoing concerns raised by major industry players, particularly Maluti Mountain Brewery (MMB), over the financial and employment implications of the so-called ‘sin tax’.
The proposed amendments were tabled recently by Finance Minister Retšelisitsoe Matlanyane under the Tobacco and Alcoholic Products Levy (Amendment of Schedule) Regulations, 2025. The amendments aim to raise the levy on tobacco products from 15 to 20 percent and on alcoholic beverages from 7.5 to 10 percent. According to the committee’s report, the ministry ultimately plans to increase the levies incrementally to 20 percent for tobacco and 30 percent for alcohol.
However, the Economic and Development Cluster has called for a pause in the implementation of the 2.5 percent increase on tobacco and the 5 percent increase on alcohol. The committee advised the Ministry of Finance and Development Planning to continue consultations with key stakeholders, including Maluti Mountain Brewery and the Lesotho Liquor and Restaurant Association, to resolve the impasse through a collaborative approach.
During submissions to the committee, Maluti Mountain Brewery expressed serious concerns about the impact of the proposed tax hikes. The company reported a significant drop in the production and sales of alcoholic beverages during the previous financial year, leading to employee retrenchments and the closure of depots in Mohale’s Hoek and Maseru.
MMB warned that the continuous rise in levies had already pushed many consumers to source cheaper alcoholic beverages from across the border in South Africa, resulting in a further decline in market share. The brewery further cautioned that should the trend of increasing levies persist, it might be forced to cease alcohol production altogether or, in a worst-case scenario, shut down its operations entirely.
The Economic and Development Cluster has emphasized the need for a balanced approach that protects public health objectives without jeopardizing the survival of key industries or accelerating cross-border smuggling. The committee’s stance has sparked renewed dialogue around the economic impact of sin taxes and the need for policies that promote both fiscal responsibility and private sector sustainability.
As the government considers the committee’s recommendations, all eyes are now on the Ministry of Finance and Development Planning and how it will navigate the delicate balance between generating revenue and preserving jobs and investment within Lesotho’s beverage and tobacco sectors.
