Internal Revenue Commissioner Kim Jacinto-Henares said the latest study of Oxford Economics (OE) on tobacco illicit trade is biased.
Henares also branded inaccurate the study made by the London-based think tank that the government lost more than P22 billion in revenues last year because of rampant consumption of untaxed cigarettes. The study was released in Hong Kong on September 29.
She cited a World Bank study showing that only five percent, not 19 percent as claimed by OE, of the total cigarette consumption yearly were sourced from the illicit cigarette trade.
Henares said the study made by Oxford Economics (OE) was commissioned by Philip Morris Fortune Tobacco Corporation (PMFTC), the country’s biggest cigarette producer.
She however did not elaborate apparently to avoid being dragged into a trade war between the PMFTC and its small competitors, such as Mighty Corporation (MC).
Henares said her agency is doing everything to stop the distribution of cigarette packs that do not have the required revenue stamps. She said she will issue a memorandum order requiring cigarette manufacturers to install closed-circuit television cameras (CCTV) at their production lines and warehouses to enable the BIR to monitor the volume of the firm’s production and withdrawals.
Mighty Corp., the wholly-owned Filipino cigarette producers 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 No. 8240 which 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 conduct raids of warehouses suspected of storing the contraband.
The tie-up resulted in the seizure of large quantities of untaxed cigarettes in Nueva Ecija and Batangas.
Cigarette packs, whether manufactured locally or imported, should be affixed with revenue strip stamps in compliance with the law. Offenders face eight years in jail and a fine of P50,000.