“This bill not only raises the costs of production of the local industry, but also could bring about negative effects for its employees, who could eventually lose their jobs.”
by Ducky Paredes
Albania, a small country with a population of less than 3,000,000 rejected a proposal from Sicpa Products Security S.A. to put Sicpa’s tax stamps on the country’s cigarettes and alcohol products. The Sicpa scheme, according to Albania, does not fit in with its international agreements on combating the illicit trade in tobacco products.
Albania’s President Bamir Topi vetoed a bill that would have allowed Sicpa’s expensive stamps in the country. The Balkan Insight reports that President Topi rejected what would have run counter to the Stabilization and Association Agreement (SAA) with the European Union. “This bill would change the tariffs in place at the time of the entrance into force of the SAA. Since the entrance into force of this agreement. no new tariffs can be imposed on imports and exports,” said President Topi.
More to the point, the President added: “This bill not only raises the costs of production of the local industry, but also could bring about negative effects for its employees, who could eventually lose their jobs.”
This is the second time that Sicpa’s expensive proposal has been rejected in the global tax stamp arena. In the Philippines, the House ways and means committee during the 14th Congress reported that Sicpa’s bid had flagrant violations of the Build-Operate-Transfer Law and the pre-bidding requirements set by the BIR-BOT Pre-qualification Bids and Award Committee (PBAC) in the evaluation of the Unsolicited Proposal of Sicpa.
Among these were the failure of Sicpa to meet at least 30 percent of the project cost, the inclusion of a government guarantee in its unsolicited proposal, and its inability to meet the technical and business requirements laid out by the BIR-BOT PBAC.
Both past and present Department of Justice (DOJ) secretaries Alberto Agra and Leila de Lima also agree with the findings of the House ways and means committee.
Despite its history in the Philippines, Sicpa continues to insist that it is the government’s solution to the “growing” illicit trade in the country—a claim which was rejected outright by the National Tax Research Center (NTRC).
The NTRC is one of the country’s authorities on tax policies, both in tax administration and revenue enhancement efforts. It is composed of no-nonsense technocrats who continue to lend their expertise to re-examine the existing tax system and tax policy structure.
One of the most significant documents it released was about the tax stamp technology being espoused by Sicpa, which clains that it will boost government revenues by as much as P119 billion in seven years.
When the NTRC reviewed the unsolicited Sicpa proposal, it rejected the assumptions of Sicpa. In fact, in its letter dated August 1, 2008, first and foremost in its recommendations was the need to validate the assumptions for the claimed incremental revenue of P115 billion . s
But NTRC Director Dante Sy points out that validating the Unsolicited Proposal was difficult to do since this would need an expensive national survey.
Now, Sicpa is at it again, claiming that it has the best solution to the country’s alleged rampant smuggling problem. But, what rampant smuggling problem? And how does one validate this over-blown claim?
If just to put this issue on “rampant” smuggling to rest, perhaps, the current House ways and means committee, should reopen its probe on the tax stamp deal to force Sicpa to answer what it constantly failed to address during previous congressional inquiries.
Where is the hard evidence on Sicpa’s claims on rampant smuggling? The ways and means committee should also ask the BIR to give updates regarding the government’s plan, if any, to bid out this track and trace scheme.
In Albania, an investigation by Balkan Insight, found that the multimillion-Euro tax stamp scheme, aimed at fighting Albania’s illegal tobacco and alcohol trade, would be overly costly and ultimately ineffective.
Balkan Insitght concluded that the new fiscal stamps system supplied by SICPA Securities was not in line with international agreements on combating the illicit trade in tobacco products.
Moreover, the system has no track record of reducing smuggling in the countries where it has been applied; there also doubts whether it is the right solution for the local market also remains open to question.
Moreover, Balkan tobacco companies complain that the tender to award the exclusive contract was not transparent. Contacted by Balkan Insight, Sicpa declined to comment on the allegations.
The deal with SICPA to provide revenue stamps for the Albanian government through its SICPA Trace system, at 14.4 euro per 1000 cigarettes over a period of ten years, is twice as expensive as rates offered to other countries for the same system. Sicpa offered the Philippines the same system a year ago, at $7 per 1000 cigarettes.
In his response to MPs on Wednesday, the Albanian president argued that the proposed agreement could have a negative impact on Albania’s local businesses, which eventually would trickle down to its workforce.
That would also how bringing in Sicpa technology would affect the Philippines.
* * *
Atty. Jesus “Chito” Veloso Ayala, presidential friend, political and security adviser to Cory Aquino, described by the Davao Sun-Star as “highly regarded as the guru in regional development, agri-industrialist and political kingmaker” died in Davao on April 19, 2011 at the age of 82. He is survived by his wife, Fe Misa, who is my mother’s sister, children Mike and Gauss, Lani and Mark, Ann Marie, Raffy and Ayumi, and grandchildren.
For his friends and relations in Manila (since he will be buried in Eden, his bit of heaven on the side of Mt. Apo), his cremated remains will be at the Ateneo de Manila High School Chapel, Loyola Heights, Q.C. on Saturday, April 30, 2011 from 3 to 9 in the evening during which there will also be a mass and memorial service at 5:30.
A donation to Chito’s favorite charity, Kauswagan sa Timogang Mindanao Foundation, Inc., (BDO S/A No. 860282023) would be appreciated in lieu of flowers.
# # # #
Readers who missed a column can access www.duckyparedes.com/blogs. This is updated daily. Your reactions are welcome at firstname.lastname@example.org