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THE
government made public on Friday a letter-endorsement
from then tax chief Jose Mario Buñag validating the tax
classification of a foreign cigarette brand, a
validation Buñag would later completely ignore to the
embarrassment of Finance Secretary Margarito Teves.
The
letter-endorsement, dated June 13, 2007, is the “smoking
gun” that proves the Bureau of Internal Revenue under
Buñag conducted a price survey supporting the UK-based
British-American Tobacco (BAT) that its Pall Mall brand
was a mid-priced product and not premium.
Premium
cigarettes pay a higher excise tax of P25 per pack while
mid-price brands pay only P6.74 a pack.
Buñag
had issued a statement saying it was illegal for the
Department of Finance to scale back the excise tax.
Finance
Undersecretary Gaudencio Mendoza Jr. said on Friday
Buñag’s published statement has placed the DOF in a bad
light and made it appear it was favoring particular
cigarette manufacturers.
“Buñag
himself validated the mid-price classification of the
Pall Mall brand when he reported to us on June 13, 2007,
and I quote: ‘. . . based on results of the price survey
on the said cigarette brand and its variants conducted
last December 22, 2006, the respective average net
retail prices thereof, excluding the value-added and
excise taxes, is P6.15 per pact with the applicable tax
rate of P6.35 per pack [now P6.74 per pack].’”
Under
the law, the excise rate on cigarettes is based on their
net retail price and this, in turn, is based on the
results of a price survey.
Mendoza
said Buñag completely ignored the results of his own
survey determining the brand’s net retail price at P14 a
pack and making it a mid-price product.
“Buñag
made [an incorrect] determination six months after his
own price survey, some four months after he made a
definitive ruling and just a few days before he left as
BIR commissioner,” Mendoza said in apparent
bewilderment.
“He
ruled on the higher classification of the product in
February this year without citing the results of his own
price survey. I do not know his motives,” he added.
According to Mendoza, Buñag’s claim of a downgrade in
tax classification was baseless as one was never
undertaken to begin with.
Only a
price survey determines the proper excise tax
classification, one that was only undertaken during
Buñag’s term as BIR chief after considerable but
inexcusable delay,
Mendoza stressed. |
