Mozambique: CTA says the sealing of beers and RTDs is not economically viable

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Mozambique: CTA says the sealing of beers and RTDs is not economically viable

7:37 CAT | 31 Jul 2020

Photo courtesy: CTA

The CTA last Thursday, July 23, submitted to the government its opinion on the Draft Regulation for the Sealing of Alcoholic Beverages and Manufactured Tobacco, advocating that beers and RTDs [ready-to-drink beverages] should not be sealed, as being neither socially nor economically viable.

The draft regulation provides for the introduction of digital sealing, at a cost of €4.95 per thousand stamps. The private sector is concerned that, given that the proposed price, the costs related to the acquisition and installation of machinery necessary to affix the seal to the various production lines, the hiring of specialised labour and the hiring of consultancy services, among others, are expected to increase.

The average speed of the bottling machines varies between 40,000 and 60,000 units per hour. The introduction of sealing would significantly reduce production outputs (in the order of 20% to 40%), resulting in a strong under-supply to the national market and consequent reduction in the tax contribution, contrary to the government’s purpose. (The Beer and RTDs sector currently generates around 8 billion meticais in taxes annually.)

The CTA also warns that the sealing of beers and RTDs may cause a slowdown in investment, similarly resulting in a loss of tax revenue.

The CTA response notes with concern that a measure intended to control illicit trade and combat smuggling should impose such a disproportionate burden, in terms of increased costs and lower productivity, on the private sector, when the ultimate beneficiary of any sealing would in fact be the state.

Source: CTA / Press Release