Gov’t eyes additional P1B in ‘sin’ tax take a month

As a result of its tough stance against cigarette manufacturer Mighty Corp. for alleged tax evasion, the government would collect an additional P1 billion in “sin” taxes monthly, Finance Secretary Carlos G. Dominguez III said.

“Please accept my warmest commendations for the great work the Bureau of Internal Revenue has done in the case of Mighty. Assiduous investigative work and effective enforcement broke what could be the biggest instance of tax fraud in our country,” Dominguez said in a speech during the BIR’s 113th anniversary last Wednesday.

“As a result of the BIR’s decisive action against Mighty, we now expect revenues from sin taxes to increase by P1 billion a month,” Dominguez added.

The BIR had filed in the Department of Justice three tax evasion cases against Bulacan-based Mighty and its top executives for a total of P37.9 billion in unpaid excise taxes due to alleged use of fake tax stamps.

In his recent State of the Nation Address, President Duterte ordered the Department of Finance and the BIR to accept Mighty’s tax settlement offer of P25 billion and the term that the firm “will no longer engage in the tobacco business.”

Homegrown Mighty is the second biggest cigarette manufacturer in the country after PMFTC Inc., the joint venture of tycoon Lucio Tan and global giant Philip Morris International.

But the President said “the acceptance of the tax settlement offer does not preclude other criminal charges against the company that the BIR may decide to file.”

The government decided to settle with Mighty as it wanted “to avoid a long court battle that, as we saw in previous cases, could take years to resolve,” the President said.

The tax settlement amount will be funded by the sale of Mighty’s assets and distribution network to the Philippine unit of Japan Tobacco International.

Dominguez had said the government was expecting to collect up to P30 billion, including value-added tax, from the settlement with Mighty.

The government had already accepted an initial P3.44-billion payment from Mighty and JTI.

While Dominguez said “cigarette manufacturing had always been a troublesome sector as far as collecting proper taxes is concerned,” the Finance chief was optimistic that this would become “smaller problem in the future because of the new tools for surveillance and documentation of tax payments to be employed by the BIR to help run after tax cheats.”

“At the moment, we are collecting more sin taxes than projected. This is a good sign. It is a tribute to the men and women of our revenue agencies. Remember that much of the money collected in sin taxes goes to improving health services for the country’s poor,” according to Dominguez.

With higher excise rates slapped on alcoholic drinks and cigarettes under a unitary system since January, total sin tax collections grew 5.44 percent year-on-year to P60.047 billion in the first half, the latest BIR data showed.—BEN DE VERA