Oxford Economics study inaccurate, says BIR chief

MANILA, Philippines - BIR commissioner Kim J. Henares disputes a report that the government lost more than P22 billion in revenues due to rampant consumption of untaxed cigarettes, arguing the report is biased and inaccurate.

The study, made by London-based Oxford Economics Study was commissioned by Philip Morris Fortune Tobacco Corp. (PMFTC).

The study reported that Filipinos consumed 105.4 billion sticks of cigarette last year, 90 percent of which was manufactured in the Philippines. In a recent interview with dzRH, Henares said the OE study claimed that 19 percent (or 20 billion) of this annual cigarette consumption comes from illegal cigarette trade, and only about 86 billion sticks were sold legally. Henares explained that a similar study was conduced by the World Bank which reported only five percent of consumption come from illegal trade.

Henares said her department has been implementing measures to counter illicit cigarette activities. Under Revenue Regulation No. 7-2014, all cigarette packs, local or imported, shall be affixed with revenue stamp to imple,emt the Sin Tax Law. Wholesalers and retailers were instructed to get supplies with the authorized tax stampls. Offenders who do not use the tax stamp will be penalized with up to eight years imprisonment and a P50,000 fine.

Another effort to curb illegal cigarette trade is the issuance of a memorandum order requiring cigarette manufacturers to install closed-circuit  television (CCTV) cameras in production lines and warehouses to enable the BIR to monitor the volume of production and withdrawals.

For the year, BIR is looking at hitting their tax collection targets from sin tax. Republic Act 10351, otherwise known as “An Act Restructuring the Excise Tax on Alcohol and Tobacco Products,” primarily aims to promote health by discouraging vices and generate additional revenue for healthcare.