BURS presses ahead with contested 'track and trace' system

Mbongeni Mguni | Monday October 24, 2022 06:00

Clamping down: BURS says much of its lost tax revenues are due to illicit activities in the excisable goods sector which includes alcohol and tobacco products PIC: KENNEDY RAMOKONE

The track and trace system involves placing a biometric imprint on all alcohol and tobacco products as they are manufactured or imported into the country, allowing the BURS to check that the correct tax revenue is being paid and that the products are genuine and not illicit.

The BURS believes that the alcohol and tobacco industries are a key player in the estimated loss of P3 billion in tax revenues each year, due to smuggling, illicit products, and evasion by some industry players.

The track and trace initiative has been on the cards since at least 2016 and has been strongly resisted in particular by the alcohol industry, which views the biometric stamps as not only a burden to trade but an additional operating expense.

On Wednesday, BURS commissioner general, Jeanette Makgolo said Authentix, the US firm given a 10-year contract to run the track and trace system, had hit the ground running.

“The solution provider, in collaboration with BURS, has commenced the process of conducting industry visits to familiarise with industry processes and technologies to ensure the solution fits seamlessly into the industry production lines,” she told a media briefing.

Quizzed on whether the industry had accepted the system and its costs, Makgolo said there was general acceptance.

“I want to believe the smoke has died down because since Authentix came, we have been engaging with the industry and while there are arguments, they do appreciate the objective,” she said in response to media enquiries. “You may only be hearing those against the system, but there are others who are for it and feel that the prices (from smuggled and illicit products) have been objectionable. “It’s never 100% support at that and one person who does not agree can continue making noise. “They can never be 100% happy but they do appreciate.”

BURS Customs Services commissioner, Segolo Lekau told BusinessWeek from a starting position of between 30 to 25 thebe per stamp being paid by the industry, consultations had reduced this to a final range of between five and 15 thebe.

“We believe this is quite reasonable and that the consumer and the industry can take it,” he said. “We have been engaging the industry on this matter since 2016, trying to find a solution that can be a win-win. “We settled on this track and trace and it’s clear that this is a system that we believe will take us somewhere.”

While alcohol industry officials could not be reached for comment on Wednesday, indications are that manufacturers and importers in the sector are still unhappy with the track and trace system’s introduction.

As late as August, Business Botswana and Botswana Alcohol Industry Association representatives were appealing for a meeting with Finance minister, Peggy Serame on the track and trace system.

Issues from the two organisations include the cost of the stamps, whether the 15 thebe levy will not go up in future, the process used to choose Authentix and many other technical concerns.

In previous comments to BusinessWeek on the matter, BURS officials expressed that the protracted consultations since 2016 had to reach an end.

“We had given them from 2016 to understand the landscape in terms of smuggling and under-reporting, but that has not changed and that’s why we have said in this financial year, having given them those years to come up with a solution, it is time for BURS to bring its solution,” BURS’ operations commissioner, Phodiso Valashia said earlier this year.