As if the higher excise taxes on cigarettes had not burdened manufacturers and consumers equally, the state printer will increase the price of tax stamps to 23 centavos per piece, according to a group in the tobacco industry.
In a statement on Saturday, the Philippine Tobacco Institute (PTI) said it opposed APO Production Unit Inc.'s plan to increase the cost of the cigarette tax stamp from its current 15 centavos. The last price adjustment of 13 centavos per stamp was made in 2018, when the Internal Revenue Stamps Integrated System (Irsis) project was started in 2014 to collect the correct excise duties on cigarettes.
PTI groups domestic cigarette manufacturers, exporters and tobacco leaf suppliers.
In a March 15 letter to the President and Chairman of the APO, Michael Dalumpines, PTI President Rodolfo Salanga said the higher costs were "incomprehensible and exaggerated". Salanga noted that "APO is not an income-generating government agency and its" monopoly "on the production of tax stamps is for regulatory purposes and not for increasing revenue." Citing APO's discussions with cigarette manufacturers and the Bureau of Internal Revenue (BIR) Salanga said the actual cost of printing tax stamps was only 11.38 centavos each.
Review of the APO move
Given the differences in actual production costs and the price APO wanted to charge cigarette companies for postage stamps, PTI's calculations showed the agency would increase its bottom line by as much as 102 percent, Salanga said.
"However, APO could not justify its reason for raising prices, allegedly due to the higher cost of ink and paper to make the security stamps," added Salanga. Salanga said PTI also wrote to the BIR to express its concern and asked the country's largest tax authority to “review the APO's move because certain government processes have not been followed, particularly the lack of a public tender as required by law . ”
Salanga noted that the prices for tax stamps could only be adjusted by the BIR in accordance with the tax rules enacted in 2014 and 2017.
The BIR plans to add new and improved tax stamps for tobacco products this year to combat the increasing illegal trade.
In February, the Ministry of Finance (DOF) announced that the imminent introduction of the extended Irsis by the BIR would further intensify its campaign against cigarette smuggling.
BIR officials previously said the new tax stamps would have more security features as previous stamps had been forged, resulting in lost revenue for the government. In addition to cigarettes, alcoholic beverages and e-cigarettes would soon also have internal tax stamps.
Counterfeit products
This year, the excise duty on cigarettes rose from P45 last year to P50 per pack, as required by Republic Act No. 11346 or the Tobacco Tax Act of 2019.
Excise tax rates for e-cigarettes, vapes and alcoholic beverages also increased from January 2021 under RA 11467, signed by President Duterte in 2020.
The illicit trade in counterfeit and smuggled cigarettes flourished amid the COVID-19 pandemic, particularly as supply declined during the strict lockdown that restricted circulation of unnecessary goods.
In turn, many consumers turned to cheaper – sometimes bogus – alternatives due to a pandemic-triggered recession.
Internal Revenue Commissioner Caesar Dulay previously said the BIR's strike team against illicit cigarette trafficking had 55 cigarette machines, 4.89 million packs of various cigarettes and 22.39 million counterfeit tax stamps totaling 1.23 billion last year Pesetas confiscated.
BIR and DOF officials had warned that unscrupulous traders would use the recent tax hikes for "sins," which in turn would fund the universal health program. INQ
Continue reading
Don't miss the latest news and information. 
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer and other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4 a.m. and share articles on social media. Call 896 6000