DOF challenged to collect uncollected taxes

Congressmen challenged the Department of Finance yesterday to first collect the huge amount of taxes due from big companies like La Suerte Cigar and Cigarette Factory before pushing for a new excise tax law.

"Congress’ reluctance to impose new taxes hinges on its strong conviction that government must first collect what it has been empowered to collect under existing tax laws before we can agree to any new tax," said administration Rep. Exequiel Javier, former chairman of the House ways and means committee.

Javier and Rep. Eric Singson, former vice chairman of the ways and means committee, castigated the DOF and the World Bank for blaming Congress for the non-passage of a new excise tax measure for "sin products" like cigarette and liquor.

"Every time Congress fails to enact proposed tax measures, the WB and its DOF lackeys blame lawmakers. It’s obvious that the WB-DOF tandem is again using arm-twisting tactics to force Congress to burden our people with more taxes," they said.

They emphasized that it is the DOF, not Congress, that is to blame for the non-passage of a new excise tax measure for sin products.

Singson, who hails from the tobacco-producing region of Ilocos, stressed that the tobacco industry is the most taxed sector in the country. "The government is trying to kill the goose that lays the golden eggs with its proposed tax measure."

Javier and Singson said the DOF’s belated implementation of an important provision in the existing sin tax law has cost government more than P3 billion in lost revenues.

They said for the past four years, the government was not able to collect nearly P3 billion in excise taxes from La Suerte owing to its failure to conduct a price survey of new cigarette brands for purposes of classifying them in their proper tax categories.

"This serious act of omission allowed La Suerte to enjoy low tax rates for the past four years even while it is selling its cigarettes at a higher price than originally declared. BIR discovered belatedly that La Suerte’s Astro and Memphis brands were actually medium-priced cigarettes disguising as ‘low-priced,’" the solons said.

They pointed out that it was only BIR Commissioner Guillermo Parayno who realized that government was bleeding by the billions of pesos due to the non-implementation of this important tax provision.

"Government should pay for its inefficiency. We will not pass new taxes unless it is able to collect first what is due from La Suerte," Singson stressed.

Javier and Singson said it was the DOF which wanted a shift in the system of taxation to specific from the value-based ad valorem.

"We warned them (DOF) in 1997 that by shifting to the specific tax system, government would not be able to capture additional revenues from price increases. They refused to listen, hence they are now paying for this very costly mistake," they said.