Solons buck tax measure to boost revenues

A group of congressmen led by Rep. Herminio Teves, vice chairman of the House ways and means committee, has moved to block the implementation of a Bureau of Internal Revenue (BIR) regulation that would increase the excise taxes on new cigarette brands and enable the government to collect billions of pesos in uncollected taxes.

A House of Representatives source said the congressmen have apparently given in to the intense lobbying of two cigarette companies, La Suerte Cigar and Cigarette Co. and British American Tobacco (BAT), to stop the implementation of the new tax scheme. The BIR regulation should have taken effect today.

Earlier, Rep. Exequiel Javier denounced the BIR and the Department of Finance in a privilege speech for the loss of P3 billion in uncollected taxes from some cigarette brands for allowing them to remain in their low tax brackets.

He identified these cigarette brands as Astro Menthol 100s, Astro Filter King, Astro Menthol King, Memphis Menthol 100s and Memphis Filter King of La Suerte Cigar and Cigarette Company, and Lucky Strike of BAT.

BIR Revenue Regulation 22-2003 would increase the excise tax on these brands and other cigarettes and yield nearly P2 billion in additional revenues annually for the government based on the present production volumes.

The reclassification of these cigarette brands was the result of a survey conducted by the BIR, which found that 11 cigarette brands have higher retail prices than originally declared with the bureau.

The House source said the affected tobacco companies have lobbied not only the House ways and means committee but also the DOF and the BIR to stop the implementation of the new BIR regulation.

"Instead of helping the government raise revenues to bridge the budget deficit, these solons are making it difficult for the government to collect much-needed taxes," he said.

It was learned that P8 million is lost daily due to government’s failure to collect the proper excise taxes from these new cigarette brands.