There is considerable confusion in government over whether the integrity of the excise stamp tax affixed on cigarettes and other excisable product has been compromised, its printers on Friday having asserted that none of the security features have been copied and passed off as genuine.
This was stressed by government printers at the meeting of stakeholders the Bureau of Internal Revenue called last Friday to shed light on the alleged use of fake excise stamps that has thus far also allegedly cost the national coffers tens of billions of pesos.
The excise stamp-tax printers, APO Production Unit Inc., categorically said none of its ostensibly secure features embedded in each of the stamps affixed on excisable products, locally manufactured cigarettes in this case, have been breached by sham printers.
“We offer full support to the BIR [and] assist in resolving the issue. We can assure you that the tax stamps currently have not been compromised. We are at the full disposal of the BIR to come up with the necessary [preventive] measures,” an APO representative at the meeting said last Friday.
But Internal Revenue Deputy Commissioner Jesus Clint Aranas has doubts that he made known before the Senate Ways and Means Committee in mid-February when he acknowledged the printing machines that generate the excise-tax stamps are commercially available.
He also acknowledged the proliferation of sham excise tax stamps costing the government some P15 billion a year in lost revenue that magnifies the true cost of shenanigans going on.
While Aranas vouched for the unimpaired integrity of APO Production as printers of supposedly secure excise-tax stamps, he would not say the same of its printing machines simply because these are commercial, as opposed to, secure machines.
“The presumption is that the fake stamps are not from APO, [they are] printed outside. The problem is, and this is why we are trying to improve the security features, is that the printer used by APO is not a security printer. It is available to the commercial market so other people have that kind of commercial printing machine. They only put security features. They put tag guns…inks [as] security features. But the printer is commercially available,” Aranas told the Senate committee on ways and means.
This developed as cigarette industry stakeholders last Friday vowed to help stop the proliferation of fake tax stamps on cigarette products and help the government find the illegal printers, according to the BIR.
At the meeting with cigarette companies, Internal Revenue Commissioner Caesar R. Dulay said the proliferation of fake tax stamps on cigarette packs is not just a problem for the BIR and the manufacturing industry but the country, as well.
“The issue of fake stamps is not only a concern of the BIR, industry players, printing office, the provider of these fake stamps, [but a] concern of whole country,” Dulay said at the meeting.
Internal Revenue Assistant Commissioner Teresita M. Angeles said that, before the implementation of the “sin” tax law, the agency collected P32.16 billion from locally manufactured cigarettes in 2013. When the legislation passed, revenues from excise taxes doubled to P67.94 billion.
For 2016, excise collection dipped to P85.9 billion, from P90 billion in 2015, with some of the decrease traced to the proliferation of tax stamps, the implementation of the graphic health-warning law, and from smuggled cigarettes, according to the BIR.
“We’d like to address this issue as objectively as we can, with all transparency and fairness. We’d like to welcome open discussion, recommendations, issues and concerns affecting the industry and, more specifically, to address the problem of fake stamps,” Dulay said.
The measures advanced to help resolve the issues include strengthening of enforcement action, regular monitoring activity of the establishments, implementation of closed-circuit televisions (CCTVs) that transmit footage to the BIR on real time, mounting a sustained information drive and entering into a tripartite agreement with the Philippine Retailers Association and cigarette companies.
According to Richard James, director of Corporate Affairs at Philip Morris International-Philip Morris Fortune Tobacco Co. Ltd., proposed that regular surveys be done looking into the validity of excise-tax stamps. He also said sustained enforcement in the retail environment be pursued and the continuous dissemination of information about the stamp-verifier application.
“What we find is that enforcement action in retail shops has a big impact on the community around, so people are very wary of accepting fake tax stamps if they think they will lose their business license, or if they think they will be subject to enforcement,” James said.
Mighty Corp. told the BIR they already have CCTVs in place in their manufacturing facility even before the dialogue last Friday.
“That is why in the past we felt we were being singled out because that one [CCTV] is already existing in our plant. So now under the leadership of the honorable Caesar Dulay, we expect nothing but fairness,” a Mighty Corp. representative told the gathered stakeholders last Friday.
According to Dulay, a draft tripartite agreement is already in the works and that consultations with stakeholders will be pursued on the issue of improving the security features of the printers used for the production of excise-tax stamps.
“So before July, when we are to enter into a new stamp arrangement, we will again call the stakeholders and get the proper feedback. I think the issue then was the amount, the price of the stamps. Rest assured that we will be consulting the stakeholders,” Dulay added.
Meanwhile, Finance Secretary Carlos G. Dominguez III urged the Bureau of Customs (BOC) and the BIR to file the appropriate charges against persons and companies proven to be the owners of P2.2 billion worth of smuggled and counterfeit tobacco products.
In a report to Dominguez, Customs Commissioner Nicanor E. Faeldon said customs operatives have seized over P2 billion worth of smuggled and counterfeit tobacco products, including cigarette brands manufactured by Mighty Corp. that contained fake tax stamps, in raids in Pampanga and the cities of General Santos and Zamboanga in Mindanao.
“If the evidence warrants, I urge the BIR and the BOC to file the appropriate charges in court as soon as possible,” Dominguez said.
He also wants government officials in cahoots with the erring entities included in the charge sheet if they are found to have been involved in these tax evasion bids.
“They [BOC and BIR] should speed up their investigations and also look into the possible involvement of bureaucrats acting as protectors of these large-scale tax-evasion attempts,” Dominguez said.
1 comment
Integrity is assured? Eh bakit may nageexist na fake tax stamps? Yan ang hirap. Yung APO kasi, inutile. Umaasa lang yan sa third party suppliers. Ano bang pananagutan ng mga yun? Lalo ng mga Israeli na yan. Pakeelam nyan satin basta kumikita sila ng dolyares.