Making smugglers happy

From: Manila Standard Today

By JoJo Robles

The BIR’s [Bureau of Internal Revenue’s] questionable tax-increasing programs have come under fire in the Senate, which is hearing petitions of tobacco-producing farmers and cigarette manufacturers to stop the passage of a new law on “sin taxes” being pushed by BIR and the Aquino administration. The government’s failure to collect the income it projects from gold production is often seen as a precursor of the creation of a potentially huge black market in cigarettes – and no additional income for state coffers.

The Department of Finance hopes to collect between P31 billion and P60 billion (depending on how high the cigarette tax hikes go) from its proposed restructured excise tax system on tobacco and alcohol products—even if it still cannot explain how it will accomplish this goal. The government wants to increase taxes on locally produced cigarettes by 708 percent to 1,000 percent, with the bulk of the tax burden falling on low-priced brands.

When Henares attempted to sell the line that smuggling is not related to high taxes during a recent hearing conducted by the Senate committee on ways and means on the restructuring of the excise tax system, she was quickly chastised by Senate President Juan Ponce Enrile, himself a former Customs commissioner. “We try your system, I’m willing to bet you, you won’t be able to collect what you’re trying to collect,” Enrile told Henares.

Enrile warned that the government cannot control cigarette smuggling “even if you employ the entire Armed Forces of the Philippines and the Philippine Navy” in the effort. “You will [make] the entire Southern border of the Philippines a busy corridor for smuggled cigarettes,” he said.

The government’s goal, Enrile said, should be to find a system that will raise taxes while protecting the interests of the tobacco farmers and the industry that supports them. The tax system should be equitable, non-arbitrary and reasonable to all parties concerned, he added.

Henares and her boss, Finance Secretary Cesar Purisima, should take Enrile’s advice rather than just doing what they want and expecting other government agencies to do the impossible task of stopping smuggling for them. But will they do it?


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