PTI Accuses SICPA of False Claims

Source from:  US News Lasvegas 12/20/2010

Lobbyists at the Philippine Tobacco Institute (PTI) on Sunday accused the Swiss firm SICPA Security Products SA of falsely claiming that its excise stamp tax system will generate P100 billion for government in the event this is chosen over competitors in the business. In a statement sent by e-mail, PTI president Rodolfo Salanga said the SICPA system actually met only 11 percent of the parameters specified by revenue officials in their continuing search for an effective yet affordable excise tax mechanism for cigarettes and alcohol products in the country. PTI's comments surfaced in the wake of SICPA's submission of a position paper before the House committee on Ways and Means where it said it has technology that stops the "massive illicit trade of tobacco products in the country." In that paper, SICPA claimed it can deliver P100 billion worth of excise revenues to the national coffers over a seven-year period if government were to chose its products over competing systems being offered before the Bureau of Internal Revenue. Salanga said the claim was simply incredible. According to him, SICPA's position paper really represented a "desperate attempt to convince lawmakers that its technology is superior to other systems being offered to the BIR when in reality the SICPATRACE system only passed 35 out of 83 technical requirements and met only 11 percent of the listed functional/business requirements." There is ongoing competition over who or what automated excise tax system best fits the country's need to reconfigure its fiscal landscape so that collection is not only effectively expanded but efficient and affordable as well. SICPA had proposed a system that initially cost 50 centavos per pack to adopt, which later was reduced to 20 centavos. Competitors like PMFTC, for example, came up with alternative solutions that will cost only 10 centavos, which was considered superior as it was seen to preserve the existing pricing scheme industry members want. "Sicpa and the BIR have both failed to show proof during several congressional hearings that there is massive illicit trade of tobacco products in the country," Salanga also said. He also cited the findings of the Committee, which was then chaired by Antique Rep. Exequiel Javier, that Sicpa's assertion still needs to be validated because it was "largely based on its assumption … that the Philippines is suffering from tax leakages in excise tax collections on tobacco products as well as rampant trade of counterfeit tobacco products." It was noted that in countries where SICPA systems were in place, the incident of smuggling even increased. Tobacco trade expert Luk Joossens was quoted as saying Brazil, Turkey and the United States reported continued smuggling of cigarette products even with the SICPA systems in place, mostly because monitoring was conducted on the basis of proprietary devices such that countries that did not have them were unable to block or monitor smuggled items. Enditem