La Suerte secures TRO vs higher taxes

La Suerte Cigar and Cigarette Factory Inc. has been able to secure a 20-day temporary restraining order (TRO) against the imposition of higher taxes on its new cigarettes by the Bureau of Internal Revenue (BIR).

The TRO was issued by the Parañaque Regional Trial Court following a petition from La Suerte against a 400-percent increase on taxes to be imposed on its new cigarette brands – Astro and Memphis.

La Suerte claims that the 400-percent tax increase on its Astro and Memphis cigarette brands would cause irreparable harm to the company since the two brands comprise 98 percent of La Suerte’s total production.

According to Judge Leoncia Real-Dimagiba, the BIR increase "considering the present state of our economy could eventually lead to retrenchment or in the worst case scenario, a closure, thus killing the goose that lays the golden egg."

La Suerte claims that BIR Revenue Regulation No. 22-2003 "would create a distortion in the market as it would be forced to increase the prices of its products to absorb the additional excise tax while their competitors, which are not covered by the provisions of the assailed revenue regulation, would continue to sell at their present prices, tilting the playing field in favor of the old brands at the expense of new brands."

Judge Real-Dimagiba noted that while taxes are the lifeblood of the government, "the collection should be made in accordance with law as any arbitrariness would negate the very reason for government itself."

She also cited a Supreme Court ruling which states that "even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure."