Civil society coalition and health advocates hailed the Bureau of Customs (BOC) for the temporary suspension of Mighty Corp.’s license to operate its customs-bonded warehouse following alleged violation of the Tariff and Customs Code.
In a statement, the coalition said that government actions clearly bear out the government’s commitment to generating a climate of regulatory compliance, within which the social objectives of the Sin Tax Law can best be met.
“We are gratified by the BOC’s action to temporarily close Mighty Corp.’s warehouse to prevent revenue leaks, as well as by the DOF’s [Department of Finance] wider effort of probing the allegations against the company,” the umbrella group said.
The coalition is composed of the Action for Economic Reforms (AER), FCTC Alliance of the Philippines (FCAP), Philippine College of Physicians (PCP) and Woman Health Philippines.
To recall, the BOC issued a memorandum last month approving a DOF Task Force’s recommendation to close down Mighty’s importation warehouse.
The BOC shutdown of Mighty’s warehouse comes amid a maelstrom of controversy.
Throughout 2013, Mighty has been accused of engaging in technical smuggling, resulting in artificially low prices of its cigarettes, which, in turn encouraged the shifting of consumption from higher-priced cigarettes to Mighty’s brands.
The coalition stressed that the downshifting of consumption does not align with the Sin Tax Reform Law’s objective of discouraging smoking.
“It should also be noted that some of the charges leveled against Mighty have been affirmed in the initial report of the DOF Task Force, which attested to substantial unaccounted raw materials that should have been exported, as well as potentially huge revenue leakage,” the coalition said.
“These findings square well with the commonly noted observation that in 2013, Mighty’s cigarettes were sold at a price below the break-even rate,” it added.
During the course of evidence gathering and documentation at the Port of Manila, it was noted that the subject Mighty has made a series of requests for large payments of duties and taxes of Mighty’s warehousing importations.
“It is highly irregular, bordering on the anomalous, for Mighty to make duty payments for unusually large volume of bonded raw materials that are supposed to be devoted to manufacturing and exportation of its finished products,” the group added.
The coalition is now looking forward to the eventual release of the DOF Task Force’s final report.
It added that it is highly reassuring that the BOC and the DOF’s decisive response to the Mighty controversy will serve to prevent a similar incident from being repeated this year.
“As last year’s experience with Mighty Corp. proved, the practice of artificially depressing the price of cigarettes sets a worrisome precedent that goads other tobacco manufacturers to follow suit,” it said.