Seldom heard in the cacophony surrounding government allegations of tax evasion by local tobacco firm Mighty Corp. is the side of the folks who will bear the brunt of the burden should the company close its doors.
Internal Revenue Commissioner Caesar Dulay suggested last week that as early as May the tobacco firm might have to cease operations as a penalty for using “fake” tax stamps and thereby evading proper tax payments. This came on the heels of a series of revelations and accusations that Mighty, a homegrown firm that was founded soon after World War II, had been evading taxes mainly by producing bogus tax stamps, totaling P9.6 billion in back charges. By law, the Bureau of Internal Revenue is authorized to cancel the license to operate of companies found guilty of tax evasion.
But if Mighty’s factory in Bulacan is shuttered, the biggest number of people to be adversely affected by it would not be the Wongchuking family or its factory workers, sales force and other allied workers. The most deeply affected would be local tobacco farmers, most of them in the Ilocos. As well, farm workers hired on a seasonal basis following the tobacco farming cycle and numbering much more than the farmers themselves would lose their livelihood.
Mario Cabasal, national president of Naftac or the National Federation of Tobacco Farmers and Cooperatives, which counts a total membership of 55,000, says his fellow farmers are dreading the day Mighty would have to cease operations.
This is because, he says, Mighty is the only cigarette manufacturer that buys the “low-grade and reject” parts of tobacco plants from them. The other tobacco concern also buys along with Mighty the premium or “high-grade” tobacco leaves, he says, but only Mighty pays attention to the less desirable parts of the plant, which is mixed in to formulate its cigarettes. It’s the money they earn from selling the low-grade tobacco that gives farmers a comfortable edge and continued assurance of their livelihood.
The toll that a closure of Mighty, the second-largest tobacco concern in the country, would take is considerable.
Around 6,000 direct and indirect employees or workers of Mighty would lose their jobs; that means about 30,000 citizens adversely affected, including the workers’ families. The farmers themselves number about 55,000, and, counting their families, the total would come to a staggering 300,000.
Cabasal says he alone hires 10 agricultural workers to do field work, so if they and other workers hired by tobacco farms lose their livelihood, the toll could reach nearly a million.
But the issue has ramifications beyond those directly engaged in the tobacco industry. All those living in tobacco-producing provinces would likewise be affected, for if the affected farmers stop producing tobacco, then the provincial governments would no longer be entitled to a share of the “sin tax” imposed by Republic Act No. 7171.
“This is why we are appealing to President Duterte to address the issues being raised against Mighty,” says Cabasal. The firm’s owners have sought a compromise regarding their alleged tax liabilities, and there has been an apparent turnaround since the President said he was open to talks with Mighty to settle its case.
Instead there have been threats of closure and cancellation of Mighty’s license to operate, and even an order to arrest Alexander Wongchuking, the corporation’s president.
Perhaps those itching for a confrontation with—if not the closure of—Mighty, should consider that by shutting the door to any form of compromise, they will be hurting more people than a single family, firm, or community. Tobacco farming and the manufacture of tobacco products date back to the Spanish colonial times. And whatever one’s opinion may be of smoking and its toll on health and survival, the fact remains that cigarettes, cigars and other tobacco products are still legal. In fact, by passing the Sin Tax Law, the state even sought to profit more from the industry, with a large chunk of the proceeds going to health programs.