Govt stamp-printer’s plan to increase prices opposed

THE Philippine Tobacco Institute (PTI) opposed the plan of APO Production Unit Inc. (APO) to increase the printing cost of cigarette stamps from the current 15 centavos to 23 centavos.

In his letter to APO Chairman and President Michael J. Dalumpines dated March 15, 2021, PTI President Rodolfo F. Salanga decried the increase as “unconscionable and excessive.” Salanga also emphasized that APO is not a revenue-generating government agency and its “monopoly” of producing the tax stamps is for regulatory purposes and not to raise revenues.

APO is a government-run printing office tapped by the Bureau of Internal Revenue (BIR) to run the Internal Revenue Stamps Integrated System (IRSIS) project or the security tax stamps on cigarettes. The project was rolled out in September 2014 to monitor the supply and sale of tobacco products and guarantee payment of excise taxes by manufacturers.

The PTI, on the other hand, is an association of local cigarette manufacturers, exporters and leaf suppliers in the tobacco industry.

Based on the BIR’S Revenue Regulations 6-2017, the price of the internal

revenue stamps on imported and locally-manufactured cigarettes shall be paid by the importer or local manufacturer of cigarettes to the APO. According to the PTI, the proposed increase was discussed in a series of meetings conducted by the APO with cigarette manufacturers together with BIR and Iris Corp. In one of those meetings, the printing agency presented the actual cost of each tax stamp is P0.11377. With the planned 23 centavos to be paid by manufacturers, APO will gain a profit of P0.11623, the PTI said.

The PTI pointed out that the APO, whose main function is to print government security-sensitive documents and not raise revenues, cannot justify its reason to increase the price, which is allegedly due to higher cost of ink and paper to produce the security stamps.

“In view of the foregoing, we believe that the 8-centavo printing-cost increase from the current 15 centavos per internal revenue stamp to the proposed 23 centavos is unconscionable and excessive. We wish to emphasize that the intent for the internal revenue stamp is to ensure the collection of excise taxes,” the PTI said in its letter. “APO should not opportunistically use such requirement to collect internal revenue stamp printing cost with a target of more than 102 percent net profit of its actual cost.”

According to the PTI, they have already sent a series of letters to the BIR and APO beginning December last year 2020 to express their concerns about the planned 8-centavo increase. They also requested the revenue agency to review APO’S move citing certain government processes were not complied with particularly the absence of a public bidding as provided for by law.

Furthermore, PTI said APO should not implement any increase without BIR issuing first a revenue regulation to adjust the price. The group cited Section 6 of Revenue Regulation 7-2014 (as amended by RR 6-2017) on the “Payment of the Price of Internal Revenue Stamps Escalation Provisions.” That section provides that “in case of occurrence of inf lation, escalation and/or decrease in costs of raw materials and equipment to be used by APO, the BIR shall accordingly adjust the price of internal revenue stamps, subject to prior consultation with all concerned stakeholders and the issuance of the amendatory revenue regulations for the effective implementation thereof.”

Despite this, PTI said it is amenable to a 2-centavo increase per stamp on the current 15 centavos. The PTI added this would still give APO a net profit from its actual cost of a little over 11 centavos. The group cited that the last increase in 2018 was also two centavos from the initial price of 13 centavos in 2014.

The association’s concerns, which include the lack of public bidding by APO for procurement of printing ink, paper and lease of machines and equipment, came amid a recent protest action held by APO employees on March 15 asking President Duterte to fire Dalumpines due to various anomalies and irregularities under his tenure.

Dalumpines’s management of APO had been surrounded with controversy, the APO employees said, according to PTI. News reports said APO officials are under investigation for allegedly modifying the “gun” used to scan tax stamps without the approval of the BIR. In another case, the Commission on Audit has cited the agency for violating government procurement laws. The COA questioned the spending by APO of P222.4 million for the lease of various printing equipment from private printers, which constitutes sub-contracting that is contrary to the procurement law.