10 December 2012

Mozambique: No More Cheap Alcohol, Assembly Decides

Maputo — The Mozambican parliament, the Assembly of the Republic, on Monday passed a government bill that sharply increases taxation on imitation wines and spirits.

The bill is aimed at extraordinarily cheap locally manufactured spirits.

These consist of ethyl alcohol, diluted with water, to which various essences, aromas, and concentrates are added. They are then sold, under such labels as “Tropical” or “Temptation”, as “whisky”, “rum” or “gin” – although they have virtually nothing in common with the genuine versions of these drinks.

These spirits are the easiest way for people on low incomes to become completely and dangerously drunk. Flasks and small bottles of these concoctions, containing between 100 and 250 millilitres, sell for between 15 and 25 meticais (between 50 and 83 US cents).

Introducing the bill, Finance Minister Manuel Chang said “the social costs of this sort of drink have been increasing, among which are the degradation of public health and morals, violence, traffic accidents, students who turn up drunk at school, and workers who appear at their workplace in an alcoholic haze”.

The bill amends the “specific consumption tax”, imposed on items deemed harmful or luxuries, so that this type of spirit will now incur a tax of 150 meticais per litre, rising to 160 meticais a litre in 2014 and 175 meticais a litre in 2015. This should almost triple the price at which these drinks are sold.

This tax is the same as that charged for genuine whiskies, brandies and other spirits.

There are also fake wines legally on sale, consisting of diluted ethyl alcohol, plus colouring, aromas and grape extract. These drinks will also be brought into the tax system at the same rate as real wine of 60 meticais a litre, rising to 65 meticais a litre in 2014 and 70 meticais a litre in 2015.

The main opposition party, the former rebel movement Renamo, objected to the bill – but gave two radically different reasons.

The Renamo members of the Assembly’s Plan and Budget Commission opted for prohibition. They said that the fake wines and spirits should simply be banned “because they are the greatest causes of the depravation of a large number of Mozambican youths”.

But the Renamo deputies on the Commission on Economic Activities and Services, far from wanting to ban these drinks, called for the government to help the companies producing them “so that they become good quality drinks that do not damage health, and can be exported”.

The same bill increased taxes on cigarettes. After discussions between the government and the major cigarette producer in Mozambique, British American Tobacco (BAT), it was agreed to raise the taxes on the most common brands by 58.3 per cent in 2013, a further 28.95 per cent in 2014, and 20.41 per cent in 2015, giving a cumulative tax increase of 145.83 per cent.

As with the bills on personal income tax and corporation tax, this bill was passed by the deputies of the ruling Frelimo Party and of the Mozambican Democratic Movement (MDM), while Renamo voted against.

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