Gov’t wants cigarette firms to shoulder cost of new tax stamps

The Department of Finance will ask cigarette manufacturers to shoulder the higher costs arising from the roll out of the new but more expensive tax stamps, which will have improved security features, by the Bureau of Internal Revenue.

“We have to have a chat with the cigarette companies and say: Look, you’re the ones who are going to pay for this. Because the last time they launched the tax stamps, the companies were not consulted. We need to consult them to know if they can afford it,” Finance Secretary Carlos G. Dominguez said last week.

Dominguez said the DOF was supporting the BIR’s plan to roll out new tax stamps with better security features by the second half of the year, although he said these could be expensive. At present, government security printer APO Production Unit produces the tax stamps.

“Apparently, of the 10 security features [of the current tax stamp], the counterfeiters have already been able to copy eight. Of course, we need to change it, Dominguez said.

The finance chief added that even the applications and machines that check whether a tax stamp is fake have already been copied by counterfeiters.
“Maraming tarantado sa mundong ito, malaking pera eh (There are a lot of unscrupulous traders in this world, because of the huge money involved). Really, this (problem on fake tax stamps) is so big,” he said.

Dominguez said changing the stamps was a priority amid the huge foregone revenues arising due to the fake tax stamps.

Early this month, the BIR seized products of Bulacan-based Mighty Corp. that yielded fake cigarette tax stamps during inspection at a Cebu mall, even as the country’s largest tax-collection agency also inspected cigarettes of other domestic and foreign manufacturers.

A report furnished to Commissioner Caesar R. Dulay showed that the BIR conducted inventory-taking at Metro Mandaue mall in Mandaue City on Feb. 7 to 8, pursuant to a Feb. 3 mission order issued to check the alleged proliferation of fake stamps in Cebu City earlier discovered by Irsis Corp.

In all, BIR personnel found 33 master cases of Marlboro cigarettes, 11 master cases of Fortune and seven master cases of Hope—products of market leader PMFTC Inc.; 19 master cases of Jackpot; 164 master cases of Mighty products, on top of 902 loose packs of Mighty cigarettes.

“After checking the authenticity of the affixed stamps, it was discovered that all cigarette products bearing the Mighty brand registered a red-colored reading which indicated fake or counterfeit stamps used on their products,” according to the BIR report.

As such, the BIR seized the seven master cases of Mighty’s green hard menthol cigarettes, 58 master cases of the white soft menthol, and 99 master cases of the red full flavor.

Also, the BIR confiscated 337 loose packs of the green hard menthol variant, 362 packs of the white soft menthol, as well as 203 packs of the red full flavor of Mighty.

A master case contains 50 reams or cartons, while each ream has 10 packs.

At an excise tax of P30 per pack, foregone revenue from the confiscated products—a total of 82,902 packs—would reach P2.49 million.