Group offers to help gov’t inspect tobacco firms’ facilities

MANILA, Philippines - FCTC Alliance of the Philippines, a civil society group that supported the passage of the sin tax reform law,  is willing to assist the government in conducting inspections of tobacco firms’ facilities to determine their compliance with regulations.

Maricar Limpin, president of FCTC, said the coalition is supportive of a proposal that aims to tighten the government’s watch on cigarette companies amid reports of illicit tobacco trade in the country.

PMFTC, a joint venture between global tobacco giant Philip Morris and taipan Lucio Tan’s Fortune Tobacco, earlier asked the Bureau of Internal Revenue to install third party 24/7 inspectors in all manufacturing facilities of cigarette companies to ensure that they are paying the proper taxes.

“We support it as long as we would be the monitoring group or somebody else not recommended by a cigarette company,” Limpin said.

BIR commissioner Kim Henares, however, objected to PMFTC’s proposal as it would violative of the tax code.

“The National Revenue Code said that it’s only the commissioner and the officers who can be involved in excise tax functions and doing functions of surveillance, so we cannot have third party (inspectors),” she said.

 Limpin acknowledged that while there may be illicit trade in tobacco products, it is not pervasive as reported.

Based on a report by UK-based Oxford Economics and US-based International Tax and Investment Center, the government supposedly lost P15.6  billion in revenues due to non-payment of correct taxes by local cigarette companies. The amount represents a six-fold jump from the P2.6 billion in taxes lost to illicit tobacco trade.  During the same period, consumption of domestic illegal tobacco almost tripled to P17.1 billion from P6.1 billion in 2012.

The report said one out of five cigarettes consumed in the country last ear were illegally traded.

 “Without appropriate safeguards put in place… there’s a danger that the scale of tax evasion we’ve seen right now could further escalate,” said Adrian Cooper, CEO at Oxford Economics.