Lawmakers score Sicpa claim on lost revenues

MANILA, Philippines - Key leaders of the powerful House ways and means committee scored officials of SICPA Product Security SA (SICPA) for claiming that it could prevent the illicit tobacco trade, which it says is purportedly worth at least P10 billion.

Rep. Danilo Suarez of Quezon said SICPA cannot even prove that such an amount of fake and smuggled products are proliferating in the country. During a congressional hearing last year, SICPA director Hans Schwab admitted that their figure was based on international studies.

When Rep. Rufus Rodriguez of Cagayan de Oro City asked if SICPA verified the P10-billion amount, Schwab said no.“We are now wondering how Schwab could come up with such a figure without verifying these studies,” Suarez asked.

“We would also like to know why Schwab is so cocksure about his tamper-proof system when reports say that his tax stamps can be duplicated and that his scheme has been shunned by the US state of Indiana.”

Earlier, reports say that Indiana Revenue Commissioner John Eckart rejected SICPA’s tax stamp scheme because even the US state of California, which adopted the system, “doubted that encrypted stamps had any known impact on the state’s decrease in counterfeit and contraband activity.”

Eckart also noted a report by the US Tobacco, Alcohol, and Firearms (ATF), which said that it seized 3,800 counterfeit versions of the new encrypted tax stamps in April 2005, and 27,752 (of such stamps) in June 2005, or within a month after California implemented the system.

During the same hearing, Suarez and Rodriguez challenged Schwab to enter into a “no cure-no pay” contract with the government if it is totally confident about its “fool proof” system as well as the revenue it will generate.

While SICPA claimed that their system could help the government raise an additional P115 billion in seven years, several congressmen were doubtful of the figure, especially after noting that the volume of cigarettes in the Philippines is going down following the implementation of the Republic Act 9334, or the law increasing the excise tax rates on alcohol and tobacco products beginning in 2005.