BANAL: Magic trek

No longer running for public office this May, Finance Secretary Margarito Teves sounded feisty recently.

He challenged some congressmen to a legal duel in the Supreme Court, as he butted for his P13-billion pet project—the “magic” stamp on cigarettes and liquor.

The project was an unsolicited proposal from Swiss firm Sicpa Product Security SA to affix the “magic” stamp on local cigarettes.

Without much ado, the Department of Finance went on a tough trek to get this cute administration of Gloriaetta behind the unsolicited proposal.

The DOF endorsed the proposal to the Bureau of Internal Revenue, to which three successive commissioners were cold, although all of them resigned eventually.

From what I heard, the BIR is now ready to put the Swiss firm’s proposal under a “Swiss” challenge.

That means that the BIR more or less has accepted the Sicpa proposal. It just needs somebody else to try to beat Sicpa to the contract.

If none comes forward to do so, which is most likely the case, the Sicpa proposal is a go—a done deal.

Now, after a public hearing on the “magic” stamp issue, the House ways and means committee reported that the DOF needed congressional approval for it.

The project, according to the committee, was in effect taxation, and only the House can change anything and everything in taxation.

And so, Teves told the committee off, saying Congress had nothing to do with it, and the congressmen could just bring the issue to the Supreme Court.

It is hard to say why, with five months in this cute administration of Gloriaetta, Teves went into a warpath with people who decided on the DOF budget.

Teves recently told a meeting of BIR officers that he would no longer run for public office in May. Well, he said he wanted to focus on the yawning budget deficit.

And so his favorite lackey, a DOF consultant known as “RD,” told the audience in the meeting: “O, pumalakpak naman kayo.” What a kisser!

* * *

BASED on the Sicpa proposal, the “magic” stamp project should cost this country only about P13 billion, a good part of which should go to proponent Sicpa.

And what do we get in return? Well, the benefits are still a bit hazy.

For one, Sicpa executives admitted in congressional hearings that, in effect, the Swiss company just plucked figures from the air to support the “magic” stamp project.

Anyway, the biggest mystery remains the undying support of Teves and sidekick “RD” for the P13-billion project.

Its impact which, according to the House ways and means committee, was basically terrible—would have to absorbed by the next administration.

And so why would Teves and company not just leave it up to Noy … este, to whoever becomes the next president.

On that point, former Economic Planning Secretary Ralph Recto, who also headed the Neda, gave some words of wisdom to Teves.

He said the Neda must stop approval of big-ticket projects (i.e. the “magic” stamp) at this time because of the proximity of the elections.

Or else, people would think this cute administration was fast-tracking some midnight deals.

By the way, when Recto was Neda chief, the authority threw the Sicpa proposal out of the window.

Teves and company salvaged it after Recto resigned. All of a sudden, the Neda gave the BIR instructions to negotiate with Sicpa.

And we all know what “negotiation” really meant.

* * *

ACCORDING to Sicpa, the “magic” stamp project should raise the BIR collection of excise taxes on cigarettes, liquor and beverages. Yes, including soft drinks!

Sicpa would simply sell to the BIR the “magic” stamps, the manufacturers would attach them on each and every piece of millions of product items, and the BIR checks the same millions of products for the genuine Sicpa stuff with hi-tech gadgets.

For the “magic” stamps, Sicpa would charge us some P13 billion in 10 years, which would have to be shouldered by the local cigarette and liquor companies.

The BIR would also act as its collection agent, since it would be the BIR that should get the payment from the companies for remittance to Sicpa.

The question was whether or not the BIR could do that legally. No wonder, Teves was in the mood for a legal duel in the courts.

In the United States, only one state government (California) bought the Sicpa “magic” stamps.

And what came out of the California experiment?

Well, according to official reports from the US, which are available to the public, the Sicpa “magic” stamp system did not increase the collection of excise taxes in California, as its proponent promised to do.

At the same time, according to those reports, it cost the state government and consumers several millions of dollars.

Based on the California experiment, the Sicpa “magic” stamp project requires stamp-affixing machines. Each one costs about P7 million. How many do we need?

More importantly, to make the system work, the BIR for its part must acquire scanning devices. Each one costs about P40,000. Now, how many does the BIR need to check on the cigarette packs and liquor bottles that are sold every minute in this archipelago of more than 7,000 islands?


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