Mindanao Times

Dominguez orders stepped-up drive versus illicit tobacco trade

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FINANCE Secretary Carlos Dominguez III has directed the Bureaus of Internal Revenue (BIR) and of Customs (BOC) to intensify their joint campaign against the illicit cigarette trade following the recent approval by the Congress of a new law imposing substantia­l excise tax increases on tobacco products.

Dominguez issued the order after the BIR reported during a recent Department of Finance (DOF) Executive Committee (Execom) meeting on the operations of the Bureau’s Strike Team, which continued to uncover the presence of counterfei­t cigarette brands and bogus tax stamps in recent raids conducted in Tacloban City and the provinces of Nueva Ecija and Tarlac.

“The proliferat­ion (of illicit cigarettes and fake tax stamps), that’s going to bloom some more next year,” Dominguez said. “Bantayan nyo yan (Keep a tight watch over that),” he told BIR and BOC officials during the Execom meeting.

Dominguez also told Customs Commission­er Rey Leonardo Guerrero to step up the BOC’s drive against cigarette smuggling, which is expected to increase once the new law imposing higher “sin” taxes on tobacco products is implemente­d starting next year.

The tobacco “sin” tax reform bill, which is now up for President Duterte’s signature, provides for a unitary P45 excise tax increase per pack on tobacco products starting in 2020, followed by a series of P5

adjustment­s until the rate reaches P60 in 2023, and a 5 percent annual increase thereafter.

The unitary excise tax rate on tobacco products was earlier increased under the Tax Reform for Accelerati­on and Inclusion (TRAIN) Law from P30 per pack of cigarettes to P32.50 beginning January 1, 2018 and to P35.00 beginning July 1, 2018.

Starting 2020, heated tobacco and vapor products will also be taxed by P10 to P50, depending on the liquid volume under the tobacco tax reform bill.

During the recent PreState of the Nation Address (Pre-SONA) forum of the Economic Developmen­t and Infrastruc­ture Cabinet Clusters at the Philippine Internatio­nal Convention Center (PICC) in Pasay City, Dominguez pointed out that the DOF made history in 2017 by collecting from a cigarette manufactur­er (Mighty Corp.) more than P30 billion for nonpayment of excise taxes and for use of counterfei­t tax stamps – the biggest sum on record raised by the government from a tax settlement with a single corporate taxpayer.

“Incidental­ly, we are the only administra­tion that actually cleaned up the cigarette industry and raised tobacco excise taxes twice. This has never happened in any past administra­tion,” Dominguez also said at the Pre-SONA forum.

Dominguez said increasing taxes on tobacco products is only one aspect of “sin” tax reform, as higher taxes on alcohol products still have to be tackled and approved by the incoming 18th Congress.

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