Committee opposes proposed sin tax hikes

Parliament’s Economic and Development Cluster has recommended that the government halts the proposed increases of 2.5 percent and five percent on tobacco and alcoholic products, respectively.

The committee further advised the Ministry of Finance and Development Planning to continue consultations with key stakeholders, including Maluti Mountain Brewery (MMB) and the Lesotho Liquor and Restaurant Association, in a bid to resolve the impasse over the so-called ‘sin tax’.

The recommendations follow finance minister Retšelisitsoe Matlanyane’s recent tabling of the Tobacco and Alcoholic Products Levy (Amendment of Schedule) Regulations, 2025. The amendment seeks to raise 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’s plan is to gradually increase the taxes until they reach 20 percent for tobacco and 30 percent for alcohol.

In submissions to the committee, Maluti Mountain Brewery expressed concern over the planned hike in alcohol levies.

MMB noted that in the past financial year, it experienced a reduction in the production and sales of alcoholic beverages, which led to employee retrenchments and closure of its Mohale’s Hoek and Maseru depots.

“The increase in levies has also driven customers to purchase cheaper alcoholic products from South Africa, resulting in a further loss of market share,” the company said.

MMB warned that continued increases in levies could ultimately force it to halt the production of alcoholic beverages; or worse, shut down entirely.