Eight months ago, President Duterte threatened to publicly name wealthy personalities who do not pay their taxes. On Tuesday Chief Presidential Legal Counsel Salvador S. Panelo said the President has ordered the arrest of Mighty Corp. owner Alexander Wongchuking for alleged economic sabotage, following reports that someone tried to bribe the Chief Executive and after the Bureau of Customs (BOC) confiscated P2.3 billion worth of Mighty-branded cigarettes with fake excise-stamp tax in a series of raids.
On the alleged bribery attempt, Mighty Corp. issued a statement categorically denying “any occasion or participation by the company in the supposed incident. Mighty has never taken part nor has it ever indulged in such activity, especially with officers of the incumbent administration”. This statement notwithstanding, the president of Mighty Corp. showed up on Tuesday at the National Bureau of Investigation offices to deny accusations that the cigarettes seized from the company’s warehouses were fake.
However, Finance Secretary Carlos G. Dominguez III said the Bureau of Internal Revenue (BIR) and the BOC are currently consolidating evidence for submission to the Department of Justice in preparation for the filing of a tax-evasion case and other charges against Mighty Corp.
The finance chief said: “We must make sure the charges stick not only to haul the guilty parties, including their possible cohorts in the government, into jail but to send a clear message to big-time tax dodgers that the Duterte administration is dead set on putting an end to their nefarious activities and sending all of them behind bars.”
In a report, Customs Commissioner Nicanor E. Faeldon said the BOC confiscated P2.3 billion worth of smuggled and fake cigarettes, “including cigarette brands manufactured by Mighty Corp. that contained fake tax stamps”. The BOC has seized a total of 73,244 master cases that contained 36.622 million packs, which at an excise tax of P30 a pack would result in more than P1 billion in foregone revenues for the government.
This is a serious offense. Under Section 263 of the Tax Code, “any person who is found in possession of locally manufactured articles subject to excise tax, the tax on which have not been paid in accordance with law…shall be punished a fine of not less than 10 times the amount of the excise due on the articles found but not less than P500 and suffer imprisonment of not less than two years but not more than four years”.
The Tax Code says manufacturers, as well as owners of bonded warehouses found with products having unpaid excise taxes would also be fined 10 times the amount on top of imprisonment of one to two years. The law also provides that “the mere unexplained possession of articles subject to excise tax, the tax on which has not been paid in accordance with law, shall be punishable”.
The finance chief said the BIR and the BOC have teamed up to strengthen the tax-evasion charges against Mighty Corp. If there is strong evidence to pin down the cigarette manufacturer, it is best to file the appropriate charges in court as soon as possible.
However, authorities must not only punish the tax cheats. They must dig deeper to determine the possible involvement of bureaucrats acting as protectors of big-time tax evaders.