Calling Culture Czar anew!

Some weeks back, a son reported that he had been sold a fake Marlboro pack by our neighborhood store. He knew it was bogus from the first puff, returned it and demanded his money back. The store handlers apologized and said they didn’t know, vowing to tell their supplier about it. 

But the harm had been done. My son said the storekeepers had acknowledged having sold, just the day before, a full ream or carton of the same spurious Marlboro Reds to a Korean resident in our village, and that it hadn’t been returned.

Well, we figured, either the SoKor guy was atypically of the timid sort, or he was a new smoker who couldn’t tell the real thing from the ersatz, or what my son described as absolute crap — like dregs of bad tobacco loosely mixed together.

He added that word had already gotten to him that other fake brands had been circulating in the market, being sold even in supposed prestige outlets like 7-11 shops.

Thankfully, I’ve had no prob with my fortnightly purchase of two reams of Fortune Reds — a much cheaper brand than my son’s Marlboro, in fact about half the cost. I get my supply at Pioneer Supermarket, where a ream now sells at P325, double last year’s price of P165, thanks to the staggering excise tax increase which I thought was onerous, but let pass since it would only affect me to the tune of something like P650-700 a month. For a high roller, excuse me, that’s coffee money.

I would’ve still kept quiet in public about how my vice, my “sin” — seen as pernicious and unhealthy by increasing numbers of people weighed down by all this rampaging parade of wimpish notions on lifestyle conservatism and political correctness — should remain a private privilege of a creature of habit. And I was willing to pay the price for it.

But the day after my son’s report, there came another, in media, on May 17, about a raid conducted by a Bureau of Customs team that “seized suspected smuggled cigarettes and seasoning products following a search on a warehouse in Manila’s Tondo district Friday morning.”

Added GMA News: “The BOC team raided the warehouse at the corner of Padre Rada and Elcano Streets, radio dzBB’s Carlo Mateo reported. Customs operatives also intercepted a container van (RXX 713) suspected used to transport the smuggled items to outlets, the report said. A tweet by Customs commissioner Rozzano Rufino Biazon indicated the ‘fake/smuggled’ cigarettes and seasonings were estimated at P25 million. Following the raid, the Customs personnel sealed the warehouse.”

On May 28, GMA News had another report, on a second raid by BOC operatives, on another warehouse, this time on C.M. Recto corner Aguilar Street, also in Tondo. The smuggled cigarettes and food items seized were estimated to be worth P30 million. BOC head honcho Biazon said “the smuggled products were from China.” This was also reported in the newspapers.

Calling the culture Czar!

Another flashback: also last month, this space proposed, somewhat jocularly but in all earnestness, the need for a self-styled Culture Czar who would conduct “a war against cretinism.”

I had bewailed “the national incidence of ka-engotan” — which I find synonymous with an abject lack of rationality, especially when it involves certain government policies proposed to address cultural traits inclusive of recreational habits such as alcohol consumption and dispensing large wads of moolah.

At the time, the pet peeves that had commonsensical Pinoys like me shaking our noggins in derision had been Comelec’s ridiculous moves to lengthen the alcohol purchase ban around Election Day and the attempt to restrict bank withdrawals of over a hundred grand ostensibly to prevent vote-buying.

I quote myself: “(A) Culture Czar, impetuously functioning alone and using only his horse sense, indigenous intuition, and knowledge of local customs, could immediately fire a broadside through media…” — that could laugh down such incredulities and exercises of nincompoopery.

And now I think we need the CC once more, to train blazing guns on certain actuations of our Department of Finance. Sure, call me biased against any “sin” tax, call me out for any self-serving agenda; call me maybe.

But it is eminently possible, as pointed out by the oppositors to that Sin Tax Reform Act of 2012, including but not confined to my beloved tobacco companies, that “sudden and steep increase in the excise tax rates will open the floodgates to illicit trade — smuggled cigarettes, counterfeits and contraband.” This was pointed out during the Senate deliberations.

Then Senate President Juan Ponce Enrile said to Bureau of Internal Revenue (BIR) Commissioner Kim S. Jacinto-Henares: “I tell you, we will try your system but I’m warning you, you cannot collect what you’re trying to collect. I’ll tell it to your faces. And I’m talking not from theory but from experience. You will have the entire Southern border of the Philippines a busy corridor for smuggled cigarettes.”

Added Sen. Ralph Recto, then chair of the Senate ways and means committee: “W)hen you impose too high taxes, illicit trade will happen. The market will work, they will want to get lower prices.” Sen. Ferdinand Marcos Jr. also agreed that high tax rates would trigger smuggling, which will in turn reduce taxes collected from cigarettes. 

The voting in the Senate was a close 10 in favor and nine against. The six others in addition to Enrile, Recto and Marcos who voted against the measure were Joker Arroyo, Chiz Escudero, Jinggoy Estrada, Greg Honasan, Tito Sotto and Bong Revilla. Those who were in favor of the very high increase were Frank Drilon, Pia Cayetano, Sonny Trillanes, Serge Osmeña, Panfilo Lacson, Miriam Santiago, Lito Lapid, Francis Pangilinan, Edgardo Angara and Koko Pimentel. Absent during the voting were Alan Cayetano, Loren Legarda, Manuel Villar and TG Guingona.

That new excise tax law, R.A. 10351, provides for a two-tier classification, high and low, with a tax increase that will reach to 1003 percent by 2017 when the tax rate becomes unitary for both high and low at P30. That means that for this year, my Fortune Red pack has already risen in cost from P16.50 to P32.50. Eventually, it will cost P30 more than the initial price.

That tax increase that was signed into law by a fellow smoker is the largest increase in taxation in our history. To no avail was it pointed out that the measure would not deliver the desired revenue due to the likely increase in illicit trade. Examples of steeply hiked tax rates in other countries were offered.

When Singapore increased the tobacco excise tax by 135 percent between 2000 and 2005, the volume of illegal cigarettes seized increased from eight million cigarettes in 2000 to 106 million in 2006 (a 1225 percent increase)! “This volume declined by 45 percent in 2009 only after government froze excise tax levels in 2005 through 2009. The government has continued its policy of freezing excise rates since.”

Singapore Finance Minister Lee Hsien Loong admitted that he eventually decided against the stupidity “because we are already seeing revenues declining, not because people are smoking less but because smuggling has gone up.”

The same rapid emergence of illicit trade was experienced in Malaysia after steep and constant excise duty increases from 2004 to 2009. In 2011, the Malaysian PM admitted: “We can’t increase the price of cigarettes sharply when the use of illegal cigarettes has reached 40 percent. This level is too high. If there is a sharp increase in the price of cigarettes, the percentage of those who smoke illegal cigarettes will continue to rise.”

Two of our neighboring countries, known for better governance than ours, already went through the exercise years ago. And acknowledged that they had been wrong. One would think, rationally, that we would learn from their experience. But no. Our powers-that-be bullheadedly ignored the precedents.

Finance Secretary Cesar Purisima now contends that “the BIR will not feel the impact of the reformed sin tax law right away because cigarette companies ‘overstocked’ on their goods before the law’s implementation.” Yeah. Right.

This is echoed by BIR commissioner Kim Henares, who said “the deficit was due to the frontloading or early withdrawal of stock from warehouses as practiced by manufacturers to avoid payment of higher excise taxes.” She had to say that after collections from the excise tax on cigarettes dropped by 41 percent in January-February despite the higher “sin” taxes, based on BIR’s own data. In March, “sin” tax revenues were down by P2.25 billion.

Of course the pair wax optimistic that this shortfall for the first half of the year will be more than made up for by improved collections from July onwards.

But wasn’t it also Kim Henares who insisted on the onerous book importation taxes a couple or so years ago, which was vehemently protested by the book industry? And didn’t her insistence eventually give way to the DOF’s eventual admission that as a signatory to the international pact on book trade, our country just had to revert to the orig status quo?

And only recently, hasn’t the DOF’s six-month deadline on businesses to have their receipts printed only by accredited printers been extended, after an outcry from the business sector?

I’m sure officials like Cesar Purisima and Kim Henares only have the nation’s welfare in mind. But there’s such a thing as backtracking on initial thinking when it’s proven wrong. I daresay the next six months will only continue to prove the steep increase in “sin” taxes wrong.

Therefore I, this week’s self-declared Culture Czar, laugh down that reform law as an example of deplorable use of intellect and reason.

The proliferation of illicit products arising from steep tax increases is well documented in many countries, including Hong Kong, Canada, Norway, the USA — which have better border patrols and more efficient customs manpower and procedures than Pilipinas.

Friends have been reporting having bought fake cigarettes in Metro Manila, Boracay, Subic, Zambales. Well, ha-ha-ha! The volume of legal cigarettes is down, and yet consumption incidence has not been affected. Ha-ha-ha! C’mon, BIR and DOF (and our new set of senators): Listen to your Culture Czar, or be laughed out of the building of virtue.

* * *

Erratum: Sorry for giving the wrong number in last week’s column for orders of the gorgeous coffee-table book 5: A Tribute to Excellence, which documents in scintillating photos and prose the record feat achieved by the Ateneo Blue Eagles with its five consecutive basketball championships in the UAAP. The correct number is 521-5596; ask for Cherry. 

 One can also buy the book online at www.ateneo5peat.com or call 861-5734 from 9 a.m. to 6 p.m., Monday to Friday. Copies are also available at Loyola Bookstore, MVP Bldg. AdMU Campus; Rex Bookstore, Ateneo-Rockwell Campus in Makati City; and at Rex Bookstore, Facilities Center Bldg. on Shaw Blvd., Mandaluyong City, in front of Wack-Wack