TOKYO: Excise tax collections from tobacco products fell by 9 percent to P91.6 billion in 2016 from P99.5 billion in 2015 despite the annual increase in excise tax rates, due in part to the proliferation of fake cigarettes and tax stamps, the Bureau of Internal Revenue (BIR) said.
Nestor Valeroso, BIR deputy commissioner, said other reasons for the decline could be the implementation of the Graphic Health Warning (GHW) Law and lower removals.
“The GHW may be one of the causes. I have to validate the figures, this is just tentative. Plus, there’s the fake stamps that we discovered, as well as smuggled cigarettes,” Valeroso said. He said there is still no estimate on the illicit market and leakages.
“The BIR is trying to prevent or reduce leakages by doing undercover surveillance activities, and we have done some strategic planning,”Valeroso said.
“There aren’t much fake stamps here in Metro Manila since it will be easier to detect. Most of it are in the provinces. There are also some smuggled cigarettes coming from Zamboanga,”he added.
Last December, the BIR and Bureau of Customs (BOC) teams seized fake cigarettes worth over P1 billion, fake tax stamps worth approximately P175 million in taxes, along with raw materials, machines for cigarette manufacturing and other paraphernalia in separate raids in Pangasinan, Pampanga and Bulacan.
Finance secretary Carlos Dominguez III lauded the BOC and BIR for intensifying their unified campaign against the illicit tobacco trade.
“These sustained efforts show that the Duterte administration’s campaign against corruption and other illegal activities would be pursued with the same zeal as its war against narco traffickers and illegal drugs,” he said.
In a report to Dominguez, the BIR said last month it shut down the premises of an unauthorized manufacturer of various cigarette brands in Lubao, Pampanga and confiscated 5.5 million pieces of fake unused cigarette strip stamps worth approximately P175 million in excise taxes and value-added tax.
“The machines and other materials for tobacco manufacture were put under the custody of the NTA (National Tobacco Administration),” BIR regional director Jethro Sabarriaga said in his report to BIR commissioner Caesar Dulay.
According to Sabarriaga, the taxpayer who owns the feed mill where the raid was conducted had registered with the BIR as a hog mill feed operator last October 2016.
“The machines seized are capable of producing 200,000 packs of cigarettes per day and supplies and stamps in warehouse are estimated to be good for one month’s production. The stamps appear to be imported and with Chinese characters,” he said.
