GMA allies buck SICPA plan
President Arroyo’s allies at the House yesterday opposed the “tamper proof” strip stamps on every pack of cigarette and bottle of liquor proposed by Switzerland-based SICPA Product Security SA, saying it amounts to the imposition of additional taxes.
The congressmen, during a briefing of the House committee on ways and means conducted by SICPA officials, also expressed doubts over the project’s viability considering that it would cost the government close to P18 billion.
Rep. Mauricio Domogan (Lakas-Kampi CMD, Baguio) said BIR would violate the Constitution if it signs the SICPA contract.
“Whether you like it or not, this is a form of taxation. Adding cost to be passed on to consumers, to me, is just another form of taxation which I don’t think can be done by the mere signing of a contract,” he said.
The Swiss firm originally offered to install its own tamper-proof stamp-tax technology to the tune of P12.2 billion in seven years or roughly P1.74 billion per year in exchange for curbing smuggling.
The project covers a period of seven years with the pre-operational costs estimated at P2.056 billion and the operational expense at P10.116 billion.
SICPA director Hans Schwab blamed inflation for the cost adjustment from 2006 to 2009 which caused the project cost to balloon to P18 billion.
Rep. Exequiel Javier (Lakas-Kampi CMD, Antique) earlier rejected claims that the Swiss firm’s tamper-proof stamp-tax technology called SICPATRACE System is “necessary” in combating smuggling and monitoring product withdrawals.
He said there is already close monitoring by BIR of the tobacco companies’ production and it is “hard for them to cheat on the volume of removals.”
Javier voiced suspicion that there is another reason for the proposal which BIR Deputy Commissioner Lilia Guillermo defended by saying it will not cost government as it will be undertaken through a Build-Operate-Transfer scheme.
Rep. Liwayway Vinzons-Chato (LP, Camarines Sur), a former BIR commissioner, said she is not sold to SICPA’s claim that the revenue stamp technology would end the “illicit” cigarette trade that has cost government several billions in revenues.
Chato said that when she was BIR chief, a team of experts who studied in the United States the stamp system voiced serious reservations about the system.
“The report that was given to me by the group was that they did not recommend the attachment of stamps because there was no clear indication as to the increase in collection in taxes and so-called leakages,” she said.
Guillermo said they are expecting other firms to challenge SICPA’s offer which she said would eventually lower the cost of the project.
“Of course, there are other solutions and we foresee a Swiss challenge, and definitely this will decrease the cost when all these solutions are compared,” she told the committee.
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