Finance Secretary Carlos Dominguez III has directed the Bureau of Internal Revenue (BIR) to coordinate with the Department of the Interior and Local Government (DILG) in filing charges against local government executives found responsible for neglecting to check the presence of, if not tolerating, illicit tobacco trade activities in their respective communities.
Dominguez said he already got a commitment from DILG Secretary Eduardo Año on his department’s cooperation with the BIR in filing charges against these erring local officials.
“We should charge them for not doing their job,” Dominguez said during a recent Department of Finance (DOF) executive committee (Execom) meeting, referring to mayors and other local officials in areas where illegal cigarette factories have been uncovered by the BIR.
Last December, Dominguez asked the DILG to investigate, and file the appropriate charges against the local officials and employees responsible for issuing a barangay permit to a factory manufacturing illicit cigarettes but disguised as a piggery in Bugallon, Pangasinan.
In a letter to Año, the Finance chief said the “inexcusable lapses” of the local officials and employees involved in the issuance of the permit “should not be left unnoticed,” more so now that barangays have the authority and resources to enforce all applicable laws and exercise diligence in inspecting establishments before approving applications to operate commercially.
Last Nov. 28, a joint team from the BIR and the National Bureau of Investigation (NBI) raided an establishment in Barangay Portic in Bugallon town and found it to be illegally operating a cigarette factory.
At least P2 billion-worth of cigarettes packed and imprinted with unregistered tax stamps and fake brand labels were seized during that raid. Authorities subsequently discovered that the factory was able to secure a barangay permit to operate as a piggery.
In his letter to Año, Dominguez pointed out that the barangay, as the smallest political unit, serves as the government’s “first line of defense against the proliferation of illegal businesses” and its officials “are mandated to enforce all laws applicable within their jurisdiction and promote the general welfare of the barangay.”
“More specifically, barangays are given the power to issue barangay permits to businesses or activities which are located or conducted within their jurisdiction. The barangays are allowed to exact reasonable fees in the issuance of business permits for the limited purpose to cover only the cost of regulation,” Dominguez said.
Aside from coordinating with the DILG, the BIR will also work closely with other government agencies to further step up its campaign against the illicit tobacco trade.
The BIR reported to Dominguez that its Strike Team and other concerned offices of the bureau “will actively coordinate with other government agencies to curtail further the proliferation of the illicit cigarette trade.”
BIR Deputy Commissioner Arnel Guballa said that as part of these efforts, the BIR Regional Investigation Division assisted a team led by the Bureau of Customs (BOC) last Feb. 9 in seizing and apprehending several unregistered cigarette-making machines and fake stamps inside an illegal cigarette manufacturing facility in Tacloban City.
Dominguez has underscored the need for heightened government vigilance against the illicit manufacture and sale of tobacco products, given that the increase in “sin” taxes has incentivized illegal traders to increasingly resort to smuggling and tax evasion.
He said the destruction in January of several machines used in the manufacture of illicitly traded cigarettes forms part of the Duterte administration’s relentless campaign against manufacturers of these products as effectively demonstrated in 2017 when the DOF, through the BIR and of BOC, cracked down on the “biggest fish,” namely Mighty Corp.
Taking down Mighty Corp. for using counterfeit excise tax stamps led to the biggest tax settlement ever in the country’s history amounting to about P30 billion, eventually forcing the company to get out of the cigarette business.
Moreover, after Japan Tobacco Inc. (JTI) took over Mighty, tobacco excise tax collections increased by at least P2 billion a month.
The contraband destroyed last Jan. 18 in Porac, Pampanga included units and parts of three filter maker machines, two packaging machines, and a cigarette-making machine, along with 484 master cases of various finished cigarette brands, and raw materials used in making cigarettes such as filter rods, tipping papers, packaging foil, acetate tow, and other supplies.
With a single cigarette-making machine capable of producing 20,000 sticks per minute, which is equivalent to about 9.6 million sticks during an eight-hour shift or 480,000 packs per day, the government has effectively blocked attempts of being defrauded of as much as P16.8 million per day of much-needed revenues for human capital development and the “Build, Build, Build” program by destroying these confiscated machines and products, Dominguez has said.
-oOo-
