Tax stamp project could jeopardize thousands of jobs

MANILA, Philippines - Thousands of jobs could be lost if the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) push through with their multi-billion peso tax stamp project that it is presently considering, the Philippine Tobacco Institute (PTI) said yesterday.

PTI president Rodolfo Salanga was taking his cue from a statement made by National Economic and Development Authority (NEDA) policy director Dennis Arroyo, who advised the Arroyo government and the next administration to prioritize job generation.

Arroyo said that small and medium enterprises (SMEs) should be the key in employment creation.

But Salanga said it is the small businesses and the self-employed which would be greatly affected by the tax stamp scheme being purveyed by SICPA Product Security SA.

He explained that the local tobacco industry relies heavily on SMEs to manufacture and sell cigarettes.

 “Our industry employs hundreds of thousands of workers, from the farmlands of Northern Luzon down to the smallest retail outlet in the southern most tip of Tawi-Tawi,” he said.

 “Should the DOF and the BIR implement the expensive tax stamp scheme, the government will destroy all the jobs that are supporting hundreds, if not thousands, of families,” he said.

Salanga said that under the SICPA tax stamp proposal, the price of locally manufactured tobacco products would go up by 52 centavos per pack. This, he said, would drastically affect the sales of both manufacturers and retailers.

In turn, lower sales volumes would push down the demand for home-grown tobacco, affecting thousands of farmers, he said.

The National Statistics Office’s October 2009 labor force survey showed that the country’s largest employers were in the wholesale and retail trade, representing about 51.5 percent of the total employed population. The agriculture sector was the second largest employer, accounting for 34 percent of the total employed.

“Imagine the loss of jobs and incomes should the DOF and the BIR implement a costly tax stamp scheme that would push prices of locally manufactured cigarettes to new heights,” he said.

“The SICPA project will be the litmus test on the Arroyo government’s resolve to create and protect jobs. With one decision, it will either protect existing jobs, or render thousands jobless in favor of a foreign company peddling dubious technology.”