Tobacco institute wants next administration to tackle tax stamps

MANILA, Philippines - The Philippine Tobacco Institute (PTI) has asked the Bureau of Internal Revenue (BIR) to shelve its plan to implement an expensive tax stamp scheme, and let the next administration tackle the highly controversial project.

PTI president Rodolfo Salanga said their group, which is composed of local cigarette manufacturers, are wondering why the BIR still wants to rush the $393-million system even though it has been found defective by the House of Representatives.

“We suggest that the next leadership handle this tax stamp issue,” Salanga said. “They will have more than enough time to dissect this expensive and intricate project, or if there is a need for this multi-billion peso tax stamp scheme.”

Salanga said speeding up the implementation of a project that is full of loopholes only raises doubts about its integrity.

Earlier, the House ways and means committee, following an intensive investigation, issued Committee Report No. 345, requiring SICPA and the BIR as well as the Department of Finance to substantiate claims that there is widespread smuggling of tobacco products as well as an unabated proliferation of counterfeit products in the country.

“Are there massive tax evasion and rampant smuggling and illegal trade of cigarettes in the country?” the lawmakers asked through the resolution.

They said that the BIR and SICPA both failed to prove these during a series of congressional inquiries. As gathered during the hearings, the congressmen said SICPA’s proposal was based on assumptions made by SICPA itself and the BIR from certain local and international studies on cigarette trade.

These studies later became the basis for the unaccounted volume of 1.6 billion cigarette packs that, in turn, would translate to the revenue promised by SICPA.

“However, it is quite disturbing to note that these studies were not validated. SICPA’s representative Hans Schwab admitted that they did not validate the studies they used for the assumption by merely accepted them ‘as there is consensus across the studies’,” the report said.

“He (Schwab) in fact refused the responsibility of validating it, saying it is the government that needs to come to terms to address the illicit trade,” the report added.

Even the National Tax Research Center (NTRC) was not satisfied with SICPA’s claims.

When it was tasked to review the costly tax stamp scheme, the NTRC recommended through a letter dated Aug. 1, 2008 that SICPA’s findings must be validated.