Solon pushes collection of La Suerte’s P3-B back taxes

La Suerte Cigar and Cigarette Factory should pay the taxes it owes the government after the Parañaque Regional Trial Court rejected the petition of the company to stop a new revenue regulation raising excise taxes on its brands.

Based on estimates by the Bureau of Internal Revenue, the government can collect P3 billion from La Suerte’s Astro and Memphis brands alone, which were introduced in the market in 1999.

In a statement, Rep. Exequiel Javier, former chairman of the House committee on ways and means, said the government should realize it was losing billions of pesos in tax revenues due to the obsolete tax classification of these brands.

The BIR had issued Regulation 22-2003 stipulating that cigarettes that were already in the market after Oct. 1, 1996, will be reclassified based on their retail price and according to the survey conducted by the BIR on leading supermarkets nationwide.

With the Parañaque court’s decision, La Suerte’s Astro Filter KS, Astro Menthol 100s and Astro Menthol KS will be levied P5.60 per pack excise tax, four times higher than the existing P1.12 per pack.

BIR figures showed that Astro, Memphis and their respective variants have been enjoying brisk sales. From an initial volume of 6.8 million packs in 1999, the combined sales volume of Astro and Memphis reached 357.8 million packs in 2002 – or a 5,200 percent increase in just four years.

Landing the court’s decision, Javier said the rise in the sales volume of Astro and Memphis was due to the tax advantage it has been enjoying for years.

"We will push for the collection of La Suerte’s back taxes Congress would not conclude La Suerte’s obligations because this would send a wrong signal to Filipino taxpayers that it pays not to pay your taxes," Javier explained.

"We should help the government raise revenues to bridge the budget deficit like collecting the right taxes from the new cigarette brands," the lawmaker stressed.

Under the court’s ruling, imported brands like Lucky Strike Filter, Lucky Strike Lts. and Lucky Strike M. Lts. of British America Tobacco will also be subjected to higher excise tax of P13.44 from the present P8.96 per pack.

La Suerte was the original licensee of Philip Morris in the Philippines since 1955. The partnership ended in 2002 after the US-based company reportedly refused to give La Suerte a higher stake in its newly-formed Philippine subsidiary.