POSTSCRIPT / August 28, 2007 / Tuesday


Philippine STAR Columnist

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Who lobbied at BIR to slash cigarette tax?

NILAKAD?: As they say, where there’s smoke, there’s fire. Yes, even if it’s just cigarette smoke.

At the Bureau of Internal Revenue, whose personnel are being whipped to collect more taxes, insiders are grousing over the alleged influence peddling of the father of a big finance official to lower the taxes on a cigarette manufacturer.

The pressure applied, sources said, has resulted in the reversal by the Department of Finance of a final BIR ruling that slapped an excise tax of P26 per pack of Pall Mall cigarettes made and sold in the Philippines.

It was reportedly Finance Undersecretary Gaudencio Mendoza who reversed the BIR ruling issued last Feb. 22 during the time of then BIR Commissioner Jose Mario Bunag.

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P93-M LOSS: Insiders found it ironic that it was Mendoza himself who initially pegged what was considered the proper excise tax of P26 per pack on Pall Mall cigarettes.

The reversal of the ruling meant returning to the old excise tax of P6.35 per pack of Pall Mall. This reportedly translates to a loss of about P20 to the government for every pack, or at least P93 million in forgone excise taxes every year.

President Gloria Arroyo may want to know why the government has given up P93 million a year in excise taxes on a “sin” item at a time when it is reducing the budget deficit through improved tax collection.

She might also want to know who gained from the government’s loss.

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MARKETING TRICK: Insiders said that La Suerte Cigar and Cigarette Co., the local maker of Pall Mall, would be able to continue selling Pall Mall at P14 per pack, including the P6.35 excise tax.

They added that La Suerte only has to sell Pall Mall at a loss for 18 months, after which it could raise its retail price — because the lower tax rate of P6.35 per pack would have become permanent by then.

Btw, aficionados say imported and local Pall Mall cigarettes smoke almost exactly the same. This may be true, because the trade mark licensing agreement between La Suerte and Pall Mall originator British American Tobacco made sure they are identical.

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THE LAW SAYS: Before the reversal, the DoF and the BIR had agreed that Pall Mall, whether imported or locally produced, should be levied an excise tax of at least P25 as a brand newly introduced in the local market.

The basis of this ruling is the excise tax law, as implemented by Revenue Regulation No.3-2006, which states that taxes on the subsequent importation or manufacture of a new brand of cigarettes should not be lower than the taxes imposed on the same brand sold in duty-free shops in the country.

Imported Pall Malls used to sell at P85 per pack at duty-free shops, inclusive of the P25 excise tax.

The BIR considered this P85 selling price of imported Pall Mall and the P25 excise tax on it in pegging the excise tax on local Pall Mall at P26.

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ARMM TEACHERS: It is not fair that public school teachers in the Autonomous Region of Muslim Mindanao are unable to secure loans from the Government Service Insurance System because their remittances and payments are not up-to-date.

It is also not fair that GSIS is crucified for not granting them loans when the non-remittance of teachers’ contributions and payments of old loans is traceable to delinquent ARMM officials.

The ARMM has been remiss in remitting the repayments of teachers for their GSIS loans secured from 2001 to 2005. The loan payments still due from the ARMM’s Department of Education (DepEd-ARMM) for that period amount to P517 million.

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BAD LOANS: There are several reasons for loans remaining unpaid.

First, the payments are regularly deducted from teachers’ salaries, but the money is not remitted to the GSIS. Second, no deductions are made at all. And third, there have been deductions, but these are irregular.

Whichever scenario applies, concerned officials, especially those with DepEd-ARMM, may be criminally liable.

Those who pocket deductions should be punished to the hilt, while those who make deductions but fail to remit the money are guilty of criminal negligence or dereliction of duty.

Criminal and administrative (if the concerned officials are still in government) charges should be filed pronto against erring officials.

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PREMIUMS: The mess is not all about insurance premiums of ARMM teachers – amounting to P450 million from 1997 to 2003 — that were collected but not sent to the GSIS.

(Incidentally, the government had bailed out the ARMM by having the Department of Budget Management take over the obligation of paying GSIS the P450 million in delinquent loan payments.)

Kaya tuloy there is speculation that the DBM would also pay the ARMM’s P517-million delinquency in remitting loan payments.

At the rate Malacanang has been coddling crooks in the ARMM, it will not be surprising if this also comes to pass.

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UNFAIR?: Officials of the Diosdado Macapagal International Airport in Clark Field are being denounced by small concessionaires claiming to be victims of unfair treatment and discrimination.

One of them, Hotdogs in a Cart (HinC) in the airport’s greeters area, said giant fastfood outlets such as Jollibee and Pizza Hut are being given preferential treatment.

HinC owner Jose Quiwa said they were given only a three-month extension after completing the six-month contract given them last Dec. 16, 2006, while the big outlets were given one-year or longer contracts.

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(First published in the Philippine STAR of August 28, 2007)

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