LOCAL cigarette manufacturer Mighty Corp.’s liability from allegedly evading tax payments by using fake Bureau of Internal Revenue (BIR) stamps could reach P25 billion or more if the government also takes into account the firm’s liability in health risks terms.
“I think P3 billion is too low given the estimates. The basic at least is P25 billion and that is with no interest and with no penalties,” Rep. Joey Salceda of Albay told reporters on the sidelines of the Financial Executives Institute of the Philippines (FINEX) 3rd Membership Meeting held in Makati City on Thursday.
Earlier, the Department of Justice (DOJ) disclosed that Mighty was willing to heed President Rodrigo Duterte’s call to pay P3 billion to the government in connection with a possible compromise deal on the company’s tax liabilities and deficiencies.
But Salceda added that Mighty should pay more than P25 billion because it also has liability in terms of health risks.
“In other words, cheaper cigarettes post greater health risk to the nation than higher-pricing risks. I mean, it is quite obvious because they cater to an income class that has no means in order to adapt to the health risks that are posed by cigarettes. So if you are going to compute the health risk due to the tax evasion, I think the case will be worse for Mighty because they have to [pay]more,” he explained.
Salceda said Mighty’s health risk liability can be computed in terms of smoking prevalence in the country which now stands at 23 percent.
“I think without Mighty [in the market]it would be lower than 20 percent. So if you compute that additional 3 percent in prevalence, I think that the health cost would be horrendous,” he said.
“So it is not just the taxes, it’s the perverse externalities created by cheap cigarettes that are really the issue here. But, you know, that is really too notional for the public but in the meantime I think the proper taxes should be collected,” he concluded.
Last week, the Department of Finance stated that the government will still pursue the tax evasion case against Mighty.
“There’s no settlement. How can we settle? We don’t know the total amount due yet,” Finance Secretary Carlos Dominguez 3rd had said.
Dominguez said the BIR is still determining the correct amount that Mighty should pay in deficiency taxes as lawyers for the cigarette maker have been “obstructing” government efforts to look into its business activities.