Farmers ask cigarette firms to pay correct taxes

MANILA, Philippines - The Philippine Tobacco Growers Association (PTGA) is calling on cigarette manufacturers to pay the correct taxes and bring in as much revenue as they can to sustain vital health and fiscal programs of the government.

According to PTGA, the interest of thousands of local tobacco farmers will be best served if cigarette manufacturers will pay the right amount of taxes since a big chunk of the revenues collected from excise taxes go to projects and programs that benefit them.

“The best way for the cigarette manufacturers to support the welfare of the country’s tobacco farmers is to pay the correct taxes to the government,” said Saturnino Distor, president of PTGA.

Under the Sin Tax Reform Law or Republic Act 10351, “15 percent of total revenues collected from excise taxes go to infrastructure projects and livelihood programs that help improve the lives of tobacco farmers and tobacco farming regions across the country,” Distor added.

PTGA issued this statement following reports that Bulacan-based Mighty Corp. owes the government about P9.5 billion for allegedly using fake tax stamps. 

Under the Bureau of Internal Revenues’ tax stamp system, which has been in place since late 2014, all cigarette packs, both local and imported, must bear tax stamps to ensure the collection of correct taxes from manufacturers.

Cigarette packs that do not have the required tax stamps are presumed to be illegal and may  be ground for tax evasion.

Government data show there has been a decline in sin tax collection from tobacco and compliance with the stamp tax system from more than 90 percent in December 2015 to August 2016 to 75 percent last September.

Excise taxes collected from tobacco products fell to P91.6 billion last year from P99.5 billion.

Finance Secretary Carlos Dominguez III said the tax deficiency of Mighty has deprived the government of much-needed revenues.

Dominguez likewise defended the BIR in handling Mighty’s case, saying the government’s main revenue-generating agency was acting within its limits. 

This after Mighty told the BIR to “act more responsibly in making statements and take into consideration the repercussions of a cancellation of the license of the company.”

Mighty EVP Oscar Barrientos said the cancellation of the firm’s license would affect around 7,000 employees and 55,000 tobacco farmers.

“We reiterate our pledge to fully cooperate with the government. But while we welcome the filing of these charges as an opportunity to clear the name of the company and its officers, we hope the BIR will also show prudence in the conduct of its probe of the company,” Barrientos added.

Dominguez, meanwhile emphasized that individuals and corporations are duty bound to pay the right amount of taxes and duties and that failure to do so has consequences.

“Let’s say I don’t pay my tax, and say hey, don’t put me in jail, my maid will lose her job, come on! Why don’t people think about those things. That is not your duty, that is your obligation to pay taxes. Why don’t you think about those things? Who is the one putting them out of job?  Their employees are at risk, of course, but who put them at risk?” Dominguez said.

“It is your responsibility. And you have a responsibility to your stakeholders, you are a private company, and one of your obligations is to make sure that your stakeholders are safe,” he added.