Finance lobbies new govt on excise tax technology

The Department of Finance wants the incoming administration of Sen. Benigno C. Aquino III, the presidential front-runner in the May 10 polls, to look closely at how government can use technology in enhancing collection of the excise tax. Finance Secretary Margarito Teves told reporters that the unsolicited proposal of SICPA Security Products SA to track and trace excise products in the Philippines should be considered by the new government, considering the outgoing administration of President Gloria Macapagal-Arroyo would not able to examine SICPA’s proposal to modernize the Bureau of Custom’s (BIR) excise tax collection system. “Given the limited time, the project can be continued [by the next administration]," Teves said. “I have always said the technology matters more, that it is going to be helpful. The name or proponent is only incidental," Teves said. The BIR, which will use the technology, has little time under the Arroyo administration to get a legal opinion and shape government's position on the SICPA proposal to use technology in tracking each piece of cigarette or bottle of alcohol for excise purposes. The bureau wants to establish if the Executive has the power to engage SICPA as technology provider in its efforts to raise revenues. “The issue here is that Congress, a coequal branch, has said the proposal is illegal, that we the executives cannot do it. That is what we are trying to confirm from the Department of Justice," BIR chief Joel Tan-Torres said in another interview. The Justice Department has not yet given its position on the matter. Lausanne, Switzerland-based SICPA is a multinational company which provides security inks and integrated security solutions for banknotes and valuable documents, founded in 1927 by Maurice Amon. Torres stressed that Finance and BIR would like to know if it would be legal to negotiate with SICPA in counting, tracking and calculating the amount of excise tax cigarette and alcohol producers must pay, based on how many bottles of alcoholic drinks and sticks of cigarettes come out of the production line. SICPA has estimated that the Philippine government can raise revenues by P75 billion using proprietary track-and-trace technology for the excise system now in place in Turkey, Thailand, and Morocco. But Congress said that adopting the SICPA technology would force manufacturers to pass on the cost to consumers by raising prices, making cigarettes and alcoholic beverages more expensive that, in the end, it would be more difficult for government to raise revenues from the sector. The BIR claims it has managed to bring the potential cost down to 20 centavos per pack of cigarettes, from the 50 centavos, that the pass-on cost should be lower. The technology could put a stop to rampant smuggling and undervaluing of excisable products, the bureau said. —VS, GMANews.TV