Tobacco Firms Buck Plan to Catch Cheats

Source from:  Philippine Daily Inquirer 05/12/2009

MANILA, Philippines-The country's tobacco manufacturers want the government to abandon its plan to adopt a P13-billion technology to catch tax cheats. The Philippine Tobacco Institute (PTI)-which includes Fortune Tobacco, La Suerte, Anglo-American and Philip Morris as members-said the use of fused-on stamps and holograms to monitor tax compliance would be costly for both the government and industry players. The group found it odd that the government would be willing to spend so much for a technology, which it said was an unsolicited proposal from Swiss firm Sicpa Product Security S.A under a build-operate-transfer scheme. Spending billions just to monitor the industry's tax compliance is unwise, the group claimed. Under the proposed system, cigarette packs for which appropriate taxes have been paid will be marked with fused-on stamps. In a speech before members of the House committee of ways and means, PTI president Rodolfo Salanga said the organization was dismayed because the Department of Finance and its attached agency, the Bureau of Internal Revenue, failed to consult industry players about the plan. He said the group was surprised to know that the government was already preparing to adopt the so-called Sicpatrace System. "For the discussion to even reach this advance stage without any participation and input from the industry affected is highly disturbing," Salanga said. "Our organization is concerned over the possible adoption of measures by the DOF and the BIR which will require significant investment, entail very high annual maintenance costs, and create substantial issues from an operations perspective," he added. Salanga said that experiences in other countries would prove that the use of fused-on stamps was not only costly but also ineffective. "This has been the experience of affiliates of some members in relation to the Sicpa system adopted by governments in Malaysia, Turkey, Brazil. In today's world, paper stamps or stickers are an outdated, costly and not very secure technology. We understand that counterfeiters were able to mimic even the most sophisticated paper stamps," he said. Responding to claims of rampant tax evasion in the tobacco-manufacturing industry, Salanga said cigarette makers were in fact some of the government's biggest tax contributors. He said that if the government was collecting less cigarette taxes than they expect, this was due to the high excise taxes slapped on cigarettes that make some of these expensive for consumers. Campaigns against smoking have also led to a drop in sales, he said. Enditem