Internal Revenue Commissioner Kim S. Jacinto-Henares has described as biased the latest study of Oxford Economics (OE) on tobacco illicit trade, released in Hong Kong to news organizations on September 29.
Henares also branded as inaccurate the study made by the London-based think tank that the government lost last year more than P22 billion in revenues due to rampant consumption of untaxed cigarettes.
She cited a World Bank study showing that only five percent, not 19 percent as claimed by OE, of the total cigarette consumption yearly sourced from the illicit cigarette trade.
Henares said the study made by OE was commissioned by Philip Morris Fortune Tobacco Corp. (PMFTC), the country’s biggest cigarette producer and a biased study for that reason.
The revenue chief, however, did not elaborate, apparently to avoid being dragged into a trade war between the PMFTC and its small competitors, such as Mighty Corp. (MC), which the former has repeatedly suspected of engaging in trade malpractices to increase its market share and profits.
She said everything is being done to stop the distribution of cigarette packs that do not have the required revenue stamps.
Henares also said she will come out within the next few days with a revenue memorandum order requiring cigarette manufacturers to install closed-circuit television (CCTV) cameras at their production lines and warehouses to enable the Bureau of Internal Revenue (BIR) monitor the volume of production and withdrawals.
MC, a wholly owned Filipino cigarette producer operating for the past 70 years, was the first to install CCTV cameras and other electronic gadgets in its factory in Bulacan in compliance with the BIR requirement under Republic Act 8240 that amended certain excise tax provisions of the Tax Code.
It was also the first to forge an accord with the BIR and the National Bureau of Investigation to run after fake cigarettes and conducted raids on warehouses suspected of storing contraband.
The tie-up resulted to the seizure of large quantities of untaxed cigarettes in Nueva Ecija and Batangas, including 94 assorted boxes of Marlboro Ice Blast, Marlboro Black, Marlboro Lights, Fortune International, Extra Marvel, Filter King, West Point Filter King, Champion Menthol, Winston Light, Pentagon and Dallas King.
All cigarette packs, whether locally manufactured or imported, were to be affixed with revenue strip stamps starting on April 1 this year under Revenue Regulations 7-2014, which implemented the so-called sin-tax law.
Earlier, Henares ordered manufacturers and importers to strictly comply with the affixture of the tax stamps, also instructing wholesalers and retailers to get their supply of the authorized tax stamps.
Under the law, the nonuse of the tax stamps mean jail terms for offenders and fines of up to P50,000.
Stiff fines are collected from distributors and retailers caught in possession of the contraband prior to the filing of tax evasion charges for non-payment of excise and value-added taxes.