After fake tax stamps, gov’t now focusing on fake, smuggled cigarettes

After the government stemmed the proliferation of fake cigarette tax stamps, Finance Secretary Carlos G. Dominguez III ordered the country’s two biggest revenue agencies to address prospective new problem—smuggling as well as domestic manufacturing of counterfeit cigarettes.

“You know, the economy is like a balloon—you press it here, it bulges out somewhere else. I think that now that the low-end cigarette producer is out, prices will rise. You know what will happen when prices rise? People will be incentivized to smuggle,” Dominguez told reporters last week. The Finance chief was referring to the sale of Mighty Corp.’s assets to Japan Tobacco International as part of the settlement of the Bulacan-based firm’s liabilities due to its use of fake tax stamps to keep prices low.

Dominguez said revenue agencies recently found in Bulacan fake cigarettes bearing the “Two Moon” brand, allegedly imported from Thailand, although they had yet to trace where they really came from.

“So I told [Customs Commissioner Isidro] Lapeña, that is something you have to watch out for because prices will go up. There are cheap producers in other countries and they will try to smuggle it here,” Dominguez said.

Separately, Internal Revenue Commissioner Caesar R. Dulay told reporters they had caught in Bacolod City a manufacturer with equipment churning out counterfeit cigarettes.

“They were manufacturing fake cigarettes of local brands,” Dulay said.

According to industry sources, the fake cigarettes found in Bacolod bore brands belonging to Philip Morris and Mighty.

Since the cigarettes were fake, they also did not bear genuine tax stamps, Dulay said.

In a report on its website, the Bureau of Internal Revenue said BIR’s Region 12-Bacolod City office and the Philippine National Police-Bacolod conducted on-the-spot surveillance operations in Bgy. Bata, as well as Libertad Extension, Villa Socorro in Barangay Taculing on Aug. 25, during which they “found and confiscated fake internal revenue stamps on cigarettes and cigarette-manufacturing machine as well as cigarette filters and tobacco dust.”

“The warehouse in Libertad was also padlocked during the operation,” the BIR added.

Dulay said they were firming up the case to be filed against the manufacturer of fake cigarettes in Bacolod.

Also, the BIR “will continue to be vigilant” against counterfeit cigarettes as well as tax stamps, Dulay said.