Philippines: Miriam Wants Cigarette Smuggling Investigated

Source from:  Malaya Business Insight  11/05/2013

Critics of sin tax law have been proven right as cigarette smuggling allegedly continues to flourish despite the law's passage during the previous congress.

This has prompted Sen. Miriam Defensor-Santiago to seek an inquiry into the alleged proliferation of cigarette smuggling and the reported plan by the National Tobacco Administration (NTA) to impose license fees on sellers and distributors of imported tobacco products.

With the alleged proliferation of cigarette smuggling, the expected rise in collection of tax revenues has been reduced despite the imposition of additional taxes on cigarettes and alcohol products through the passage of Republic Act No. 10351, the Sin Tax Reform Law, the senator said.

In Resolution No. 250 she filed with the Senate yesterday, Santiago noted that several groups have called on the NTA to adopt effective policies to combat cigarette smuggling.

These groups include the Action for Economic Reforms, Framework Convention on Tobacco, Control Alliance Philippines, Philippine College of Physicians, Philippine Society of General, Internal Medicine, and Womanhealth Philippines.

The groups also asked the NTA to establish a tracking system to effectively monitor the movement of all tobacco products.

Santiago's resolution said the groups reportedly were responding to NTA's plan to impose license and fees on sellers and distributors of imported tobacco products.

The groups challenged NTA to prove the legitimacy of its intention to curb illicit cigarette trade, and not merely perpetuate discrimination against foreign products, the resolution added.

Proving that cigarette smuggling operations are still active, Santiago recalled that on May 28, 2013, the Bureau of Customs Intelligence Group (BOC-IG) seized illegally imported cigarettes and other products from China worth P30 million.

"Congress should formulate appropriate measures to eliminate cigarette smuggling to fulfill its mandate in protecting the health of Filipinos local industry, as well as the local tobacco industry, as established in R. A. No. 10351," she said.

Earlier, the House of Representatives ways and means committee said it will review the sin tax law "for its failure to fulfill its mandate" such as raising revenues from tobacco and alcohol products as well as reducing the smoking population.

Antique Rep. Paolo Javier blamed the apparent failure of the law to the failure of BOC to check smuggling  of cigarettes and possible cases of mis-declaration that have allowed some brands to continue to sell at low prices.

Javier filed House Resolution 425 to plug a loophole in the law, specifically to target what he said was the reportedly fraudulent reporting of the volume of tobacco and cigarette withdrawals or importation by some unscrupulous manufacturers — specifically naming Mighty Corp.

"There is a need to review the consequences and implications of the recent excise tax increases in view of current market conditions… to ensure that the objectives and purposes of the law are realized; that tax administration is improved, tax leakages stopped, and that there is proper reporting and monitoring of raw materials used in the manufacture of cigarettes; and that the government is not deprived of its rightful tax revenues from alleged under or mis-declaration of cigarette volumes and  imported raw materials used in cigarette production," Javier said in a statement.

Javier said that the BOC issued in October more than 100 alert orders against suspected illegally imported shipments as the agency beefed up its campaign against smuggling.

Most of the orders were issued "because the declared cargo were believed to be undervalued, mis-classified or mis-declared, if not lacking the necessary permits or bearing unspecified product descriptions." Enditem