SICPA not a done deal, Teves tells solons
Finance secretary Margarito Teves yesterday assured lawmakers that there is nothing final in the ongoing negotiations of the Bureau of Internal Revenue (BIR) with Swiss firm SICPA Product Security SA, stressing that a "process" has to be observed.
"It must be clarified that the SICPA (proposal) is merely an unsolicited proposal under the BOT (Build-Operate-Transfer) law. It’s not a done deal yet," Teves said.
He said even if the BIR wraps up its negotiations with SICPA for the latter’s stamp-tax technology project, the proposal would still be sent back to the National Economic Development Authority (NEDA) for board approval and subsequently be subjected to a Swiss Challenge.
"Processes must be observed before a decision on SICPA is made," he said. "It must be first accepted, approved and go through some more processes like getting NEDA board approval."
The finance chief said under the Swiss challenge, a new proponent could even emerge with a much superior proposal than SICPA’s.
SICPA, as original proponent, however, has the right to match a challenger’s improved offer.
SICPA’s unsolicited proposal to affix tamper-proof stamp on every cigarette pack of liquor bottle is generating wide opposition from congressmen, including administration allies, since it would translate to higher prices for consumers.
Congressmen also said the SICPA deal could violate the BOT law and likewise noted the lopsided sharing-scheme in favor of the Swiss company.
Antique Rep. Exequiel Javier, House ways and means chair, and deputy minority leader Roilo Golez want a further study of the SICPA proposal.
Javier said the SICPA proposal involves revenue generation and, therefore, requires approval of Congress or changes in the BOT law.
Golez said SICPA would get more in terms of income than the government in terms of revenues.
Cagayan de Oro Rep. Rufus Rodriguez questioned why the tax stamp project is being rushed by the BIR when it would heavily burden consumers.
"What’s the basis for approving the project to go on? Why is this project being rushed when the amount of P20 billion would be passed on to consumers?" he said.
Rodriguez said based on a previous briefing by BIR deputy commissioner Lilia Guillermo on the projected incremental revenue of the project in seven years, a total of P20.114 billion in cost would be passed on to consumers.
Rodriguez said now is not the time to aggravate the financial burden of the people who are still recovering from the devastation wrought by recent typhoons.
Ilocos Sur Rep. Eric Singson, ways and means vice chairman, expressed fear that despite stiff opposition to the SICPA proposal, the foreign corporation might still end up bagging the contract.
"I heard the contract is being done, so I don’t know what else are we doing here," he said.
Albay Rep. Edcel Lagman said before facing a Swiss challenge, the SICPA proposal needs to pass a congressional challenge because of the many issues being raised against it. "Was the build-operate-transfer law violated when SICPA was named the original proponent? Are we here to say that SICPA’s offer was onerous? Will it pose additional burden to the people? SICPA and the BIR are fast tracking their negotiations which could render our findings moot and academic," Lagman, former House appropriations chair, said.
Baguio City Rep. Mauricio Domogan cautioned BIR against adopting the proposal as it would entail a form of taxation. "I don’t think it can be done without the approval of Congress," he said.
SICPA’s unsolicited proposal will involve the application to tobacco and alcohol 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 made.
The Investment Coordination Committee (ICC) of NEDA earlier approved the SICPA proposal and ordered the BIR to start negotiating with the Switzerland-based firm.
The NEDA-ICC, however, stressed that the unsolicited proposal should be opened to challenge from other foreign companies which could provide the same technology.
Government sources said among the four foreign companies contesting the SICPA proposal is a United Kingdom company called Payne Security Plc.
Payne, headquartered in Nottingham, is a leading global manufacturer and supplier of high quality tear tape, coated film and security products with unrivalled experience in the provision of easy opening and consumer communication packaging solutions and print protection films.
Payne Security is also a leading provider of brand protection, document authentication and personal ID solutions, helping customers to protect and identify products, documents and personal identities worldwide.
It has offices in Spain, USA, Brazil, Singapore, Indonesia and India.
The same sources said another company out to contest SICPA is a US-based firm affiliated with tobacco manufacturer Philip Morris USA.
Philip Morris USA is the tobacco division of Altria Group Inc.
The Philip Morris affiliate was earlier identified by BIR deputy commissioner Nelson Aspe as the first to offer the stamp-tax technology.
The Swiss firm seeks to install a fully integrated system which would engage the use of special strip stamps that would be affixed on each pack of domestically produced cigars and cigarettes at a project cost of P12.2 billion in seven years or roughly P1.74 billion per year in exchange for curbing smuggling.
The project consists of a track and trace system, which combines proprietary security and tracking technologies for a complete and integrated security solution for anti-counterfeiting, production monitoring, distribution control and inventory-taking for tax-administration purposes.
SICPA boasted that its proposal would guarantee additional revenues for government of at least P13.31 billion.
Officials from tobacco companies have also re-echoed their opposition to the SICPA technology, calling it "ineffective and counterproductive."
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