Smoke of genius
The Aquino (Part II) administration is simply blind to the enormous illicit trade (i.e. smuggling) of many imported items in this country, including farm produce, construction materials, gasoline and diesel, and even cigarettes and liquor.
According to leading business organizations—such as the Federation of Philippine Industries (FPI) and the Philippine Chamber of Commerce and Industry (PCCI)—the unabated massive smuggling, unfortunately, already threatens the Philippine government’s preparation for the upcoming Asean economic integration, similar to that of the European Union.
That will happen at the start of 2015, or just about six short months from now, making the entire Asean into a single market and production base. In other words, the Asean economic integration will open up most of the Philippine industries to stiff competition from the stronger industries in those other countries.
The problem is that, in the past several years under the Aquino (Part II) administration, at least according to business groups, the unrestrained massive smuggling already weakened many local industries to the point of collapse.
Thus the business community today fears that, even with the Asean economic integration, massive smuggling will only continue, ultimately threatening the stability of several local industries, in turn worsening the Philippine unemployment rate.
To the guys down here in my barangay, however, while business organizations are busy hammering on the point on “unfair competition” brought about by smuggling, they also seem to forget that smuggling does eventually worsen graft and corruption (mainly in the Bureau of Customs and the Bureau of Internal Revenue, plus perhaps all the way up to the Palace)—at our expense down here, of course!
Do you think that the bright boys and girls of our dear leader Benigno Simeon (aka BS) are not aware of all the harm done by the massive smuggling on this country and its citizens?
* * *
With tariffs and import duties already pared down to the minimum, the biggest advantage of the well-organized smuggling syndicates is thus the nonpayment of the 12 percent VAT on their importation.
Recent reports for instance talked about studies done by respected foreign institutions citing government losses—due to “illicit trade” in cigarettes and tobacco—in its excise tax collection last year, amounting to P15.6 billion.
As expected, our beloved BIR scoffed at the incontrovertible findings in the study. In their usual stroke of genius, some officials of the bureau even boasted that the Aquino (Part II) administration should be doing just fine because of its “sin tax” collections, as evident from the BIR’s exceeding its collection target last year. Really now!
Indeed the BIR exceeded its collection targets. Based on figures released by the BIR to media, in the first 11 months of 2013 alone, its sin tax collection already reached more than P90 billion.
Of that total amount of collections, by the way, some P60 billion came from cigarettes and only P29.9 billion from alcohol, which only showed how tolerant our government has become towards the vice called drinking, despite the increasing incident of drunk driving accidents in this country.
Anyway, for the full year of 2013, the BIR set its excise tax collection target at only around P86 billion. Thus, its actual collection was higher than the target by … oh well, roughly 7 percent.
To think, boss, the sin tax law purposely drove up the excise tax on cigarettes all the way up to another galaxy, with the tax on low-priced cigarettes being increased by almost 350 percent, and the tax on the mid-range priced cigarettes being raised by about 200 percent.
Now, according to the study done by the US-based International Tax and Investment Center (ITIC) and the UK-based Oxford Economics (OE), the legitimate trade in cigarettes—i.e. sales with official and accurate excise tax payments remitted to the BIR— dropped by a huge 16 percent in 2013.
On the other hand, the study noted that the illicit trade—meaning, smuggling of cigarettes from abroad and the “cheating” in excise tax payments to the BIR—apparently went up, thereby accounting for about 18 percent of total cigarette consumption in the country in 2013.
Thus the study estimated that the Aquino (Part II) administration must have foregone P15.6 billion in cigarette excise tax collection in 2013 alone, broken down into P12.7 billion in excise tax and P2.9 billion in VAT.
Incidentally, the study seems to be consistent with the findings of the Department of Finance (DOF) last year that one cigarette company, the one based in Bulacan named Mighty Corp., which cornered 30 percent of the entire cigarette market with its low-priced cigarettes of P14 per pack, owned by the Wongchungking family, must be cheating the government in its excise tax payments.
It is indeed interesting that the estimated tax “loss” in cigarette excise tax collection in 2013 was much higher than the estimated “loss” in 2012, which was put at P2.6 billion, for an increase in tax “loss” of about 500 percent.
To the guys down here in my barangay, such a huge increase in tax “losses” only implies that the syndicates in illegal cigarette trade were emboldened by the clear blessing of some genius in the Aquino (Part II) administration that specializes in this vice called smoking.
Look, boss, the administration has yet to act on the illicit trade in cigarettes, right? Or, for that matter, the illicit trade in almost everything imported in this country!
In any language and by any account, the amount of P15.6 billion in tax “losses” can only be deemed as huge, precisely because that kind of money can already buy entire government agencies, investigative bodies, and even the courts.
And those are the far more serious crimes in tax evasion—more than the cheating itself.
