Smoking gun?

packs with fake tax stamps, and the company reportedly offered a P1.5 billion settlement.

Subsequently, Mr. Duterte ordered the arrest of Mighty Corp. President Alexander D. Wongchuking for economic sabotage. A day later, he proposed a compromise deal whereby Mighty should pay P3 billion or double the amount of its estimated tax deficiency, with the proceeds to be divided equally by three government hospitals in Basilan, Sulu and Manila.

But a non-government organization, Action for Economic Reforms (AER), reminded the Chief Executive that tax amnesty is a bad policy as it would send a wrong signal and encourage bad behavior among tobacco companies as well as other firms and taxpayers.

AER said that under Section 263 of the National Internal Revenue Code on the unlawful possession or removal of articles subject to excise tax without payment of such tax, “Mighty must pay as much as P15 billion in taxes and fines, which can build and repair even more hospitals nationwide for the impoverished Filipinos.”

Department of Finance (DoF) Secretary Carlos G. Dominguez III said the government is preparing an airtight tax evasion case against the Bulacan-based firm. He lamented that the company’s lawyers were obstructing the investigation of both the BIR and the BoC, making it difficult for the DoF to determine the total amount of Mighty’s liabilities.

Mr. Dominguez also wrote a letter to Alibaba Chairman Jack Ma asking the Chinese tycoon to stop the advertisement and sale of digitally printed fake cigarette tax stamps on his online retail portal, Alibaba.com.

Reports have quoted Mighty lawyers as claiming ownership of the confiscated goods while not denying that the company was leasing the raided warehouses, and in fact, taking steps to ask for their immediate re-opening. Moreover, the BoC had established documentary evidence the San Simon, Pampanga and General Santos City warehouses are leased by Mighty Corp.

Faced with a potential smoking gun, Mighty lawyer Sigfrid Fortun blamed malfunctioning BIR excise-stamp validating devices that produced different results when used on Mighty’s products confiscated during the Pampanga raid.

A source opined that the finished goods affixed with fake tax stamps had been withdrawn from the place of manufacture without payment of excise tax and found in warehouses being leased by the same firm. “This is not as if fake stamps were accidentally affixed; they are deceiving the government,” he said.

On the other hand, the Duterte administration is presented with an opportunity to demonstrate its seriousness in the drive against crime and corruption. This case could be the litmus test that other tax evaders and the general public are closely observing to guide future conduct.

For the sake of those who conscientiously pay their fair share of taxes, the government should pursue the case.