Cigarette Firm Offers Alternative Mode to Mark Legitimate Products

Source from:  Business World 10/08/2012

PHILIP MORRIS Fortune Tobacco Corp., Inc. (PMFTC) yesterday said it is ready to present an alternative technology that will enable the government to identify tobacco products that have paid the right excise tax. PMFTC President Chris Nelson told reporters in a briefing yesterday that the technology, called Codentify, is a numeric bar code-based system now being used in Germany and Portugal. He claimed it can be considered as a cheaper alternative to the stamp-based system proposed in 2006 by Swiss firm SICPA Security Solutions. SICPA executives were not immediately available for comment. Codentify is designed to enable authorities to promptly check the legality of specific packs by texting the number to the system for verification. It is supposed to minimize cost by doing away with proprietary code-reading scanners and training. Mr. Nelson said he had discussed the alternative with officials of the Finance department and the Bureau of Internal Revenue (BIR) under the previous administration, but did not get any feedback. "We're waiting to be invited. While we are willing to present this to the government, we have to follow procedures. We have to wait for an invitation," he said. "Our system fulfills the purpose of what the government needs. The cost is just a fraction of what SICPA is proposing because all you have to pay for is the ink and the printer," he said, without giving comparative amounts. SICPA's proposal involves the printing of tamper-proof tax stamps to be affixed on cigarette packs. Under this system, cigarette manufacturers will place their orders for the stamps through an online system connected to the BIR and SICPA. The stamps will be given to the manufacturers after an approval from the BIR. SICPA's system is estimated to cost about 52 centavos per cigarette pack. BIR Commissioner Kin S. Jacinto-Henares said in a telephone interview yesterday that the bureau is open to the alternative. "There is a requirement in the law that we should have fusion stamp or bar code for tracking the products. If ever we will be inviting, it will not be for a specific person but it will be open for all those with available technology," she said. Under Section 8a of Republic Act 8424, or the Tax Reform Act of 1997, internal revenue stamps, whether of a bar code or fusion design, should be firmly and conspicuously affixed on each pack of cigars and cigarettes to enable authorities to check if the correct excise tax has been paid. But Ms. Jacinto-Henares said the bureau will have to first file a motion for reconsideration with the Justice department on its legal opinion last month that barred the BIR from proceeding with talks with SICPA, citing BIR's alleged encroachment on the authority of Congress to enact revenue measures and the proposal's alleged failure to meet financial and legal criteria. -- L. D. D. Enditem