Anti-Smuggling Device for Cigarettes Put on Hold

Source from:  Malaya 10/19/2010

THE Bureau of Internal Revenue (BIR) is freezing any action on the proposal of Chinese firm Huagong Tech Company to provide hologram-aided stamp tax that would curb smuggling of cigarette products. Commissioner Kim Jacinto-Henares said Huagong’s proposal is premature since the revenue agency has yet to get a green light from the Department of Justice (DOJ). Henares said the revenue agency would await the decision of the DOJ on their motion for reconsideration. The DOJ has barred the BIR from pursuing negotiations with an earlier technology proponent, Swiss firm SICPA Product Security SA, citing constitutional issues. Henares admitted giving an audience to Huagong officials who presented their hologram technology. The Department of Finance has said it’s up to the BIR to evaluate the proposal of Huagong Tech Co. Huagong is challenging the offer of tobacco giant PMFTC – a joint venture between Philip Morris and Fortune Tobacco Corp. – to install CODENTIFY, a technology solution that also promises to curb smuggling of cigarettes. Huagong from Wuhan province has developed a hologram-aided stamp tax technology that could not be counterfeited. Batangas Rep. Tom Apacible, a member of the House ways and means committee, said Huagong promises to provide a technology at a price much lower than the 62-centavo per pack proposal of rejected SICPA and also that of Philip Morris’ "CODENTIFY" technology. Huagong Tech Co. Ltd. is principally engaged in businesses of light amplification by stimulated emission of radiation (laser) devices, laser processing equipment and laser holographic anti-counterfeiting labels. SICPA offered a technology-driven but expensive track-and-trace excise system touted to generate up to P70 billion a year in additional revenues from alcohol and cigarette manufacturers. But such stamp tax technology would cost the government and stakeholders tens of billions of pesos. The Aquino government has junked SICPA’s unsolicited proposal as costly and not suited to the needs of the government. The decision also came in the wake of an adverse DOJ ruling branding the SICPA proposal as unconstitutional and violative of the provisions of the Build-Operate-Transfer (BOT) law. The BIR has appealed the DOJ ruling, not for SICPA’s sake, but to allow the agency to enter into a product security contract aimed at curbing smuggling of cigarettes. Enditem