House body to conduct hearing on cigarette stamp tax

MANILA, Philippines - The House Committee on Ways and Means is set to conduct next week a hearing on the controversial tax stamp proposal following the Department of Justice’s ruling that the proposal is valid.

The committee, chaired by Rep. Hermilando Mandanas (2nd District, Batangas) agreed to hold a motu propio hearing in the course of its discussions on various tax measures, which included the suspension of the expanded valued added tax (VAT) on oil products.

Rep. Rodolfo Antonino (4th District, Nueva Ecija), vice chairman of the committee, said that following the DOJ ruling, Congress should tackle the proposal to determine if it is a regulatory or a revenue measure.

The DOJ, in a legal opinion early this week, said the proposal is valid because it is a regulatory measure and not a revenue measure.

Mandanas said Congress could conduct a motu propio hearing — a hearing that does not require a resolution — on the tax stamp system proposal in light of the DOJ opinion on the matter.

 “Although there were previous discussions on the tax stamp proposal, these do not prevent us from conducting a motu propio hearing on the matter because of the latest DOJ opinion. We take it upon us the decision to conduct a hearing on the matter next week,” he said.

During the 14th Congress, the House committee on ways and means then chaired by Antique Rep. Exequiel Javier rejected the proposal of Switzerland-based firm SICPA to provide tax stamps on cigarettes.

Lawmakers then said the proposal is not possible through a variation of the build-operate-transfer (BOT), which will need Congress’ imprimatur.

They also said that the project would translate to an additional 52-centavo per pack, which will be passed on to consumers.

The SICPATRACE system proposal will involve the application to tobacco products of tamper-proof strip stamps using a combination of data matrix code and fuse-on features; and installation in the premises of tobacco manufacturers of scanning and activation software to monitor the number of tobacco products produced.

Early this week, Justice Secretary Leila de Lima said there is nothing illegal with the BIR’s plan to attach strip stamps on cigarette packs without approval from Congress.

She said it is within the powers of the BIR to pass on to consumers the cost of the project as a regulatory fee.

De Lima’s opinion reversed former Justice Secretary Alberto Agra’s previous legal opinion which said that the proposal is legislative in nature.