Mighty Corp. must pay P15B in taxes and fines, not P3B – activist policy group

Instead of unlawfully settling with a measly P3 billion, President Rodrigo Duterte must implement the full force of existing law in dealing with what is now becoming clear as tax evasion by cigarette maker Mighty Corporation.

“If the law is followed, Mighty must pay as much as P15 billion in taxes and fines which can build and repair even more hospitals nationwide for the impoverished Filipinos. The compromise amount is way below P15 billion,” said Jo-Ann Diosana, AER senior economist and trustee.

"The company must be made to face the court and, if found guilty, should be made to pay the fines imposed for the unlawful act of using fake stamps on cigarette packs and evading payment of the tobacco excise tax,” Diosana emphasized.

On Thursday, Duterte said he was willing to settle the company's tax case if Mighty would double the excise tax it failed to remit, and insisted the cigarette maker should pay P3 billion to rehabilitate hospitals in the country.

"Ako, kalimutan ko na pero ang iyang gi-imprinta, 1.5 billion of the fake stamps. Ako, musugot ko ani. Doblehun niya, kalimtan ko na. Anyway, akong saad sa iya na if someone in power pursue, I can always pardon him," he said, referring to Mighty Corporation president Alex Wongchuking.

[I will forget about the printing of 1.5 billion worth of fake stamps. I will agree to this: Pay double, I'll forget about it. Anyway, I assure him that if someone in power pursues the case, I can always pardon him.]

But for Diosana, Duterte’s move may only bring about negative consequences instead of resolving conflicts.

Section 263 of the National Internal Revenue Code states that "[a]ny manufacturer, owner or person in charge of any article subject to excise tax who removes or allows or causes the unlawful removal of any such articles from the place of production or bonded warehouse, upon which the excise tax has not been paid at the time and in the manner required, and any person who knowingly aids or abets in the removal of such articles as aforesaid, or conceals the same after illegal removal shall, for the first offense, be punished with a fine of not less than ten (10) times the amount of excise tax due on the articles but not less than One thousand pesos (P1,000) and suffer imprisonment of not less than one (1) year but not more than two (2) years."

The assessed value of the cigarettes containing fake stamps is reported at P1.5 billion.

Meanwhile, Diosana is hoping that with what Mighty Corp. did, Duterte would be forced to support the bill seeking a single cigarette tax rate.

“We hope that this track record of Mighty Corp. will lead President Duterte to reject its low two-tiered tax proposal and support the bill for a single cigarette tax rate of P40, higher than the current tax of P30,” she said.

“A higher unitary rate is better because it will generate even more government resources to fund hospitals and better healthcare for the people," she added.

Early this week, Finance Secretary Carlos Dominguez III has recommended that all persons and entities responsible for smuggling more than P2 billion worth of goods be charged in court, including government officials who may also be involved.

Cigarettes supposedly made by Mighty Corp., but with fake tax stamps, were part of the contraband, according a report on GMA News' "Unang Balita" on Tuesday. — Erwin Colcol/VDS/RSJ, GMA News