Lawmakers seek US help in tobacco firm tax probe

By Iris C. Gonzales, The Philippine Star

Posted at Mar 11 2014 08:28 AM | Updated as of Mar 11 2014 04:28 PM

MANILA, Philippines - Lawmakers from the House of Representatives have sought the assistance of the United States government in their investigation on the alleged underpayment of excise taxes by Filipino-owned cigarette manufacturer Mighty Corp.

In separate letters to American embassy officials in Manila, representatives Estrellita Suansing (1st district, Nueva Ecija) and Jonathan dela Cruz (ABAKADA Partylist) asked US lawmakers for information on the importations made by Mighty from US-based suppliers last year.

“It will also be appreciated if you can share other information regarding Mighty Corp.’s dealings with US based suppliers and/or agencies as we have been reliably informed that the company had accepted goods contained in four containers which reportedly left Norfolk, Virginia on June 17, 2013 and were received in Manila last July 28, 2013,” dela Cruz said in his letter to James McCarthy, commercial counselor at the US Embassy in Manila, a copy of which was obtained by The STAR.

In his letter, Dela Cruz said information provided by the US government would aid the House in determining whether the Philippine excise reform tax law was being properly implemented and serving its purpose of increasing revenue collections in the domestic tobacco industry.

The so-called Sin Tax Law or Republic Act 10351 raised excise taxes on alcohol and tobacco, collectively known as “sin products” for a period of five years starting in 2013.

Both Suansing and Dela Cruz said Mighty is now under investigation by the Bureau of Customs (BOC) for suspected “serious violations of tariff and customs laws.”

The cigarette manufacturer is also the subject of an upcoming probe of the House ways and means committee for alleged fraudulent reporting of volumes of tobacco and cigarette withdrawals.

Mighty has repeatedly denied that it was engaged in illegal business practices. It also said that it paid P8 billion in excise taxes last year.
Suansing, meanwhile, wrote to US Ambassador Philip Goldberg seeking data on Mighty’s imports of tobacco and non-tobacco materials from American suppliers “particularly on information pertaining to the import volumes and actual prices of tobacco leaf and acetate tow for the years 2011 thru 2013.”

The US-based suppliers include Golden Leaf Tobacco Company, Lancaster Leaf Tobacco Company, Richloam Tobacco Company, Burley Tobacco Growers Cooperative, Universal Leaf North America, Eastman Chemical Company and Celanese Acetate LLC.

“Again data from your end on import prices or invoice prices from the US is also a key to establishing whether [Mighty] has been truthfully declaring import values for correct payment of duties and taxes,” Suansing said.

He cited data from the Department of Finance noting that Mighty imports different types of tobacco from different countries which are all priced the same at 68 US cents per kilogram.

At the Senate, Senator Miriam Defensor Santiago is seeking an inquiry into the proper implementation of the excise tax reform law.