The House Committee on Ways and Means will conduct an inquiry on the alleged fraudulent reporting of the volume of tobacco and cigaret withdrawals or importations committed by unscrupulous entities that have resulted in undervaluation or misdeclaration of these products and grossly incorrect excise taxes paid to the government.
Rep. Paolo Javier (Lone District, Antique) sought the inquiry through House Resolution 425, saying questions arose as to how certain cigaret brands can be sold at such low prices despite the tax increases, and whether the government is maximizing the tax revenues when there are reports of massive down-trading from high-priced to low-priced brands.
There is a need to review the consequences and implications of the recent excise tax increases in view of current market conditions and the proper implementation of the law restructuring the excise tax on alcohol and tobacco products, Javier said in a press release from Congress.
Javier, an Assistant Majority Leader and member of the Committee on Ways and Means, said available research and studies show that as of December 2012, the smoking incidence was close to 50 percent among adults, whereas in June 2013, the smoking incidence was shown to have remained stable at 51 percent despite the substantial increase in excise taxes and significant drop in tax paid or legitimate volumes.
This phenomenon can be attributed to the sale and distribution of contraband or illicit cigarets, he said.
A cigaret company reportedly imported seven million kilos of tobacco but paid only $4.786 million compared to another company that imported one million kilos of tobacco but paid more for $4.9 million, the press release also said.*