Probe of cigarette maker’s alleged unfair business practices sought

A member of the House has called for a congressional probe of the alleged questionable business practices of a manufacturer of cheap cigarettes that may have resulted in the noncollection of at least P4.4 billion in excise taxes last year.

Party-list Rep. Jonathan dela Cruz (Abakada), a member of the House independent bloc, named the manufacturer, Mighty Corp., in House Resolution 663 which he authored.

In a statement, Dela Cruz said no less than Finance Secretary Cesar Purisima, in a memorandum dated Aug. 15, ordered the Bureau of Internal Revenue and the Bureau of Customs  to respond to the “preliminary list of findings” on the alleged anomalous trading and manufacturing activities of Mighty, a Bulacan-based company.

“In the same memorandum, Secretary Purisima indicated that the said company might liable for nonpayment of P4.421 billion in excise taxes,” Dela Cruz said.

Several lawmakers have filed resolutions calling for a review of the Sin Tax Law which took effect on Jan. 1, 2013. Rep. Paolo Javier has filed the resolution in the House calling for an inquiry while Sen. Miriam Defensor Santiago filed a similar measure in the Senate.

Congress will resume sessions today following their Yuletide break and both chambers are expected to calendar these resolutions for public hearings.

Dela Cruz said an updated report from the DOF on the implementation of the Sin Tax Law indicated, among others, the non-attainment of the benchmarked objectives and possible anomalous transactions and violations by certain manufacturers.

In his resolution, Dela Cruz said allegations of technical smuggling and under-declaration of imported tobacco leaf and other raw materials had also been lodged against Mighty.

Based on Purisima’s memorandum, it was noted that the price per kilogram of imported Virginia, Burley and Oriental Tobacco of Mighty was posted with the same price level of $0.68 kg.

Using 2012 data from the National Tobacco Administration, Purisima noted that Mighty’s import price was much lower that the prices declared by other tobacco importers which range from $3 to $8 per kilo.