House panel to revisit SICPA probe after reversal of DOJ

THE House of Representatives is taking a “take two” into the power of the Bureau of the Internal Revenue (BIR) to procure an anti-smuggling technology that would be shouldered eventually by the tobacco industry after a reversal of the previous adverse ruling of the justice department.

Batangas Rep. Hermilando Mandanas, House ways and means panel chair, said the panel will conduct a “motu propio” hearing next week on the issue following the new ruling of the Department of Justice (DOJ) upholding the right of the BIR to enter into stamp tax technology contract with any local or foreign supplier.

Mandanas said the Lower House could conduct a “motu propio” hearing on the tax stamp system and also revisit the previous recommendation of the committee.

“We take it upon us the decision to conduct a hearing on the matter next week,” he said.

Mandanas said the panel will still decide on the list of resource persons to be invited before the actual date is set.

He, however, said the re-investigation would not derail its more important hearings on proposed tax measures rationalizing the “Sin Tax” law and suspension of the expanded value added tax (EVAT) on oil products.

The latest DOJ ruling contradicted the earlier findings of the House ways and means panel under former chair, Antique Rep. Exequiel Javier, that the stamp tax proposal of Swiss firm SICPA Product Security violates the Constitution since the project is more of a revenue measure and a variation of the Build-Operate and Transfer (BOT) law.

The SICPATRACE system proposal will involve the application to tobacco products of tamper-proof strip stamps using a combination of data matrix code and fuse-on features; and installation in the premises of tobacco manufacturers of scanning and activation software to monitor the number of tobacco products produced.

While the project will not cost anything to the government, as claimed by SICPA, the  52-centavo per pack cost will be passed on to tobacco manufacturers, and eventually to consumers.

The Javier-led House and means panel likewise recommended an immediate stop in the negotiations between BIR and SICPA and called for the filing of criminal and administrative charges against members of the BIR negotiating team.

The first DOJ ruling has sustained the findings of the previous House ways and means panel.

Nueva Ecija Rep. Rodolfo Antonino, committee vice-chair, said while Congress has previously tackled the tax stamp issue, it becomes  important for lawmakers to tackle the proposal to determine if it  is a revenue or a regulatory measure after the DOJ came out with its ruling.

In a legal opinion, Justice Secretary Leila de Lima said there is nothing illegal with the BIR’s plan to attach strip stamps on cigarette packs without approval from Congress.

De Lima further said the cost could be passed on to consumers as a regulatory fee  not as a revenue source and within the BIR’s powers.

De Lima’s opinion reversed former justice secretary Alberto Agra’s legal opinion that the BIR’s plan “partakes of a tax, therefore, legislative in nature.” Dino Ng


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