Tax losses due to undervalued shoe imports estimated at P14B

The government is estimated to have lost around P14 billion in taxes and duties from undervalued footwear imports since 1997, according to the Samahan ng Magsasapatos sa Pilipinas (SMP).

According to the SMP, the government has allowed imports (primarily from China) to dominate the market. Unfortunately, the SMP complained, the government has not ensured that it collects the proper taxes and duties on such imports.

Citing an industry study, the SMP pointed out that in 1997, total imports of footwear amounted to 28.242 million pairs with a declared value of $75,927 million.

Government data showed that while the volume of footwear imports grew by 212.79 percent from 1997 to 2001, the value of the imports decreased by 70.52 percent.

Thus, by 2001, imports of footwear increased to 60.098 million pairs, but its declared value fell to $53.545 million.

Citing a specific example, the SMP said a dress footwear with outer soles and leather upper are being declared at an average price of $0.76 or about P50.

That kind of valuation, the SMP argued, is unbelievable and is a clear case of undervaluation.

Latest figures gathered by the SMP from the National Statistics Office (NSO) further show that total imports from 1997 to the present reached 264.475 million pairs with a declared import value of $37.144 million.

Based on the latest figure, the SMP claims that revenue loss through undervaluation amounts to P7.6 billion.

However, that figure, the SMP said, could even be much higher or double the amount upon closer scrutiny of the import figures and computing for additional applicable taxes.

Aside from undervaluation, the SMP said cheap imports are being dumped into the country and this may kill the already dying local footwear industry.

The SMP is urging the government to institute safeguard measures to protect whatever is left of the local footwear industry.

The SMP admits, though, that they have not yet formally filed a petition for protection under the Safeguard Measures Act.

The SMP is appealing to the government, that while the footwear industry is considered a sunset industry, its demise would still displace no less than 300,000 workers.