Tobacco industry scores costly Sicpa tax stamp scheme

The Philippine Star

Posted at Apr 17 2010 01:34 PM | Updated as of Apr 17 2010 09:34 PM

MANILA, Philippines - The Philippine Tobacco Institute (PTI) has urged the Bureau of Internal Revenue (BIR) to reject the costly tax stamp scheme of SICPA Products Security SA (SICPA) after an international body found the system as lacking “international tracking requirements.”

PTI president Rodolfo Salanga said that SICPA falsely represented to the BIR and the House ways and means committee that its SICPATRACE system features an integrated solution providing “database infrastructure and system for real-time monitoring and tracking.”

The World Health Organization Framework Convention on Tobacco Control (WHO FCTC) expert report, on the other hand, found that SICPA’s costly tax stamp scheme cannot track and trace a cigarette once it leaves the factory.

The WHO FCTC report also noted that in countries where SICPA’s system is implemented, such as Brazil and Turkey, the tax stamp systems there do not track the supply chain system. Thus, “cross-border illicit trade is not addressed,” it said.

“This is another instance of SICPA misleading the government with its false claims and should be closely looked into by the country’s fiscal managers since consumers will be paying an additional 52 centavos per pack of cigarette for a scheme that cannot even achieve its purported objectives of preventing the sale of smuggled and counterfeit tobacco products,” Salanga said.

Salanga also said that SICPA still has to prove its claims that there is rampant smuggling of tobacco products in the country.

During a congressional hearing, SICPA quoted international studies claiming that the country loses up to P10 billion in revenues each year due to the illicit trade of tobacco products. When pressed by lawmakers if SICPA verified such studies, SICPA replied negative.

The lawmakers also found the P18-billion project cost as too prohibitive. This is the same finding contained in the WHO FCTC report.

“The SICPA system costs up to $1,800 per million cigarettes and this in mostly developing countries. Such pricing is unaffordable for small and medium sized enterprises,” it said.

“The resource limitations of developing countries need to be respected,” it added.