Lawmakers welcome expanded BIR probe on fake cigarette tax stamps

MANILA—Lawmakers on Tuesday welcomed the expanded investigation being conducted by the Bureau of Internal Revenue (BIR) into the widespread use of fake tax stamps on cigarette packs that would cover all manufacturers and importers, including multinational company and market leader Philip Morris Fortune Tobacco Corporation (PMFTC).

In separate interviews, Quirino Rep. Dakila Carlo Cua, ABS Partylist Rep. Eugene Michael de Vera, Akbayan Partylist Rep. Tom Villarin, and Ako Bicol Partylist Rep. Rodel Batocabe said the disclosure of BIR Deputy Commissioner for Legal Service Jesus Clint Aranas over the weekend to investigate all tobacco firms will be good for the revenue generation of President Rodrigo Duterte and promote fair play in the business industry.

“I fully support BIR in all their efforts to combat tax evasion,” Cua, chair of the House Committee on Ways and Means, said as he noted that the move would also curb unabated smuggling of tobacco products.

According to the BIR, the government is losing billions of pesos in revenues yearly through this tax avoidance scheme as evidenced by seizure of large cache of various cigarette brands affixed with fake strip stamps since the requirement was reintroduced three years ago.

The BIR restored the use of tax stamps in 2014 to tighten monitoring and enforcement of the Sin Tax Law and collect the right amount of excise, income and value added taxes from this source.

But last November alone, the BIR and the Bureau of Customs (BOC) seized over PHP1 billion worth of fake cigarettes and approximately PHP175 million in tax equivalent of fake tax stamps in separate raids across the country.

In the meantime, De Vera said that it is fair and meritorious for the BIR to also check the foreign firms to address these concerns.

“It is the duty of the Bureau of Internal Revenue to run after tax evaders, more so those who fabricate fake stamps on cigarettes to avoid payment of excise taxes,” the Partylist lawmaker said.

“However, there should at least exists factual basis before any probe and issuance of Letters of Authority (LAs) for audit and assessment. This policy should be applied equally with no arbitrariness observing the sporting idea of fair play. As in Hamlet, and where the offense is, let the great axe fall,” De Vera said.

Batocabe, president of the Party List Coalition (PLC), lauded the BIR initiative, but stressed it should sustain its campaign against all players, including foreign companies selling imported brands.

He added that the BIR should also look into other industries.

“That is laudable so long as the campaign is sustained, unrelenting and transparent. But the BIR should not confine itself with the tobacco industry but also to other big industries which have significant leakages,” Batocabe said.

For his part, Villarin, a member of the Magnificent 7 or the so-called genuine opposition, said the BIR initiative “is a good move as this would plug the leakage in collecting ‘sin taxes’ that primarily goes to our universal health program.”

Earlier, Aranas disclosed that the BIR would be investigating all tobacco firms after a Letter of Authority to investigate was issued against homegrown Mighty Corporation (MC) over the alleged use of fake tax stamps.

The BIR official stressed that it is unfair to single out MC, the producer of low-priced cigarettes.

“We should also investigate others to get to the bottom of the problem and determine where the counterfeits are coming,” Aranas said.

Aranas said he has already submitted for signature to BIR Commissioner Caesar R. Dulay the LAs to cover all players.

Meanwhile, Mighty Corporation has dismissed earlier allegations that it was using fake strip stamps, claiming that the BIR is closely monitoring production and withdrawal at its factory in Bulacan having been the first one to install CCTV cameras to monitor its operations in compliance with a BIR order in 2014.

Records also showed that it was Mighty Corporation, in coordination with BIR, BOC, the National Bureau of Investigation (NBI) and the police that spearheaded the campaign against fake cigarettes using bogus stamps all over the country as early as two years ago.

This cooperation resulted in the arrest and indictment of scores of people as well as the seizure of large quantities of fake MC cigarettes and other brands in Cebu, Cagayan de Oro, Zamboanga provinces, Davao provinces, Ilocos provinces, Nueva Ecija, Isabela, Cagayan, Pampanga, and Bulacan, among others.