To get to the bottom of the reportedly rising number of fake cigarettes being sold in the market, Finance Secretary Carlos G. Dominguez III has ordered the country’s two biggest revenue agencies to investigate the alleged smuggling of cigarette-making machines.
During a recent meeting, Dominguez told Internal Revenue Commissioner Caesar R. Dulay and Customs Commissioner Isidro S. Lapeña “to trace the manufacturer of the machines and travel to the probable country or countries of origin to seek the cooperation of customs authorities there in finding the people behind the illegal entry of the cigarette-making units via Philippine ports.”
“Look for the manufacturers, then file complaints before the concerned embassies there,” Dominguez told Dulay and Lapeña during the meeting.
The Bureau of Internal Revenue earlier reported that it had seized cigarette-manufacturing equipment in Cagayan de Oro City. These were placed under the custody of its anti-illicit trade “strike team” and excise large taxpayers field operations division.
“A meeting was held on July 19 to discuss the forfeiture proceedings to be institutionalized through a revenue memorandum order. Appropriate action shall be taken toward dismantling and destroying these machinery and products,” the BIR said in a report to Dominguez.
BIR Deputy Commissioner Ariel Guballa was quoted by the Department of Finance as saying that the machines churn out counterfeit cigarettes for export.
But these machines “had no import permits and the manufacturer who used them did not have a permit to operate, making the entire process illegal,” Dominguez said.
As such, Dominguez directed the BIR to keep the machines in question as well as slap penalties against the importers.
Also, the Finance chief disapproved a proposal to negotiate with the importers.
Fake cigarettes were proliferating as a result of the higher excise taxes slapped on the “sin” product, thus jacking up retail prices.
The unitary cigarette excise tax further rose to P35 per pack starting July under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.
In January, the unitary excise tax slapped on cigarettes rose to P32.50 per pack from P30 a pack last year.
Signed by President Duterte last December, the TRAIN law or Republic Act No. 10963 since Jan. 1 this year has jacked up or imposed new excise taxes on cigarettes, sugary drinks, oil products and vehicles, among other goods, to compensate for the restructured personal income tax regime that raised the tax exemption cap.