DOH joins clamor to probe cigarette firm’s tax compliance

Screengrab from https://mightycorp.com.ph/

MANILA–The Department of Health (DOH) has joined the growing clamor of lawmakers for a congressional probe into the alleged sin tax malpractices of tobacco firm Mighty Corporation.

DOH spokesman Dr. Lyndon Lee Suy said Monday that the DOH will cooperate with the joint congressional oversight committee on the Sin Tax Law that will investigate the supposed excise tax liabilities of the Bulacan-based cigarette maker.

He stressed that the alleged non-compliance of companies like Mighty Corporation with the Sin Tax Law has a huge impact on the country’s health care system.

He added that noncompliance with the law would adversely affect the Department of Health’s budget allocation which it uses to finance various health campaigns and activities.

The Sin Tax Law, or Republic Act 10351, is one of the anti-smoking measures passed by the Aquino administration intended to increase prices of cigarettes and alcoholic drinks, thus making them unaffordable for the youth and the poor. Under the law, 85 percent of sin tax revenues is allocated for the enrollment of the poorest of the poor to the Philippine Health Insurance Corporation (PhilHealth).

Recent news reports said Mighty Corp. has been receiving flak for selling its products at economically unsustainable prices – even below the cost of production, excise tax and VAT. Thus, cigarettes priced at P1 per stick continue to flood the market, defeating the spirit of the law. Tobacco giant PMFTC and other local cigarette makers have accused Mighty of alleged nonpayment of correct taxes and duties which enables it to sell its products at a loss and gain market share.

“Willing kaming makipag-coordinate para malaman kung mayroon ngang hindi sumusunod (sa batas) para sa gayon ay mabigyan din ng sapat na aksyon at ma-address ang mga concerns na yan (We’re willing to coordinate to find out if there are non-compliant companies so we can take appropriate action and address these concerns),” said Lee Suy.

Last week, House Speker Feliciano Belmonte Jr. and Senators Antonio Trillanes IV and Juan Edgardo Angara called for a congressional inquiry on allegations involving Mighty Corporation and as to why the Bureau of Internal Revenue (BIR) has not lifted a finger on its alleged fraudulent practices to evade hundreds of millions of pesos in tax and duty payments. The Speaker made the call following reported funding shortfalls for government’s universal health care program.

Specifically, Belmonte said he wants lawmakers to look into why Mighty Corp. has grown so big in so short a time; whether private companies are paying the right taxes; whether government agencies like the BIR and Bureau of Customs are doing their duty in collecting the proper taxes and duties; and whether sin tax collections were being used for the designated beneficiaries, specifically the Department of Health.

But aside from Mighty Corporation, Lee Suy said the DOH is also interested in the aspect on how sin tax revenues are being allocated and utilized under government’s universal healthcare program.

Records of the Department of Finance shows that of the P91.6 billion revenue from the sin tax law in the first 11 months of 2013, about P61.622 billion came from tobacco products while the remaining P30 billion came from alcoholic drinks.