The Philippine Tobacco Institute, an association of local cigarette manufacturers, exporters, and leaf suppliers in the tobacco industry, opposed the plan of APO Production Unit Inc. to raise the printing cost of cigarette tax stamps from P0.15 to P0.23, saying the increase is “unconscionable and excessive.”
APO is a government-run printing office tapped earlier by the Bureau of Internal Revenue to run the Internal Revenue Stamps Integrated System project, or the security tax stamps on cigarettes. The project was rolled out in September 2014 to monitor the supply and sale of tobacco products and guarantee payment of excise taxes by manufacturers.
PTI president Rodolfo Salanga said in a letter to APO chairman and president Michael Dalumpines on March 15, 2021 that APO is not a revenue-generating government agency and its “monopoly” of producing the tax stamps is for regulatory purposes and not to raise revenues.
APO conducted a series of meetings with cigarette manufactures together with the Bureau of Internal Revenue and IRIS Corp. about the proposed increase and in one of those meetings, the printing agency presented the actual cost of each tax stamp at P0.11377, hence with the planned 23 centavos to be paid by manufacturers, APO will gain a profit of P0.11623.
PTI said with this computation, APO, whose main function is to print government security-sensitive documents and not raise revenues, would make a 102-percent profit. APO, however, could not justify its reason to increase the price which is allegedly due to higher cost of ink and paper to produce the security stamps, according to PTI.
“In view of the foregoing, we believe that the eight centavos printing cost increase from the current 15 centavos per internal revenue stamp to the proposed 23 centavos is unconscionable and excessive. We wish to emphasize that the intent for the internal revenue stamp is to ensure the collection of excise taxes,” PTI said.
“APO should not opportunistically use such requirement to collect internal revenue stamp printing cost with a target of more than 102 percent net profit of its actual cost,” PTI said.
PTI said it sent a series of letters to the BIR and APO since December 2020 raising its concerns about the planned eight-centavo increase which it criticized to be “unreasonable and unjustified,” as
it requested the revenue agency to review APO’s move, citing certain government processes were not complied with particularly the absence of a public bidding as provided for by law.
PTI said APO should not implement any increase without the BIR issuing first a revenue regulation to adjust the price. Section 6 of Revenue Regulation No. 7-2014 as amended by RR No. 6-2017 provides that in case of printing cost adjustments of APO, “the BIR shall accordingly adjust the price of internal revenue stamps, subject to prior consultation with all concerned stakeholders and the issuance of the mandatory revenue regulations for the effective implementation thereof.”
PTI said it was amenable to a two-centavo increase per stamp on the current 15 centavos which would still give APO a net profit from its actual cost of a little over 11 centavos. The group said the last increase in 2018 was also two centavos from the initial price of 13 centavos in 2014.