Sep 212014
 

http://wikileaks.org/cable/2009/05/09MANILA1056.html#
Reference ID Created Released Classification Origin
09MANILA1056
2009-05-18 00:36
2011-08-30 01:44
UNCLASSIFIED
Embassy Manila

VZCZCXRO6419
OO RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHML #1056 1380036
ZNR UUUUU ZZH
O 180036Z MAY 09
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4132
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
INFO RUCPDOC/USDOC WASHDC IMMEDIATE
RUEHZU/APEC COLLECTIVE IMMEDIATE
RHHMUNA/CDR USPACOM HONOLULU HI//FPA//
UNCLAS MANILA 001056

SIPDIS

STATE FOR EAP/MTS, EAP/EP, EEB/IFD/OMA
STATE PASS EXIM, OPIC, AND USTR
STATE PASS USAID FOR AA/ANE, AA/EGAT, DAA/ANE
TREASURY FOR OASIA
USDOC FOR 4430/ITA/MAC/ASIA & PAC/KOREA & SE ASIA/ASEAN

E.O. 12958: N/A
TAGS: ECON EFIN ETRD EINV PGOV RP
SUBJECT: Revenue Crunch Leads to Questionable Book Tax

¶1. Summary: The Philippine Bureau of Customs decision to levy
duties on foreign book imports has generated an outcry in the
Philippine media, led by internet forums, and by affected
businesses. Philippine Senator Miriam Defensor-Santiago has called
for a formal investigation into the decision, noting that charging
duty on books appears to violate the Florence Agreement of 1950,
which pledged signatories to exempt books from customs duties. End
summary.

¶2. Local internet discussion forums broke the news when the
Philippine Bureau of Customs started collecting import duties on
books, in apparent violation of the Florence Agreement of 1950,
whose signatories, including the Philippines, agree not to impose
import taxes on books. Publishers report that in March Customs
began stopping shipments of imported books, refusing to release them
until importers paid a 5% tariff. Customs then refined its policy,
citing the Philippine Tariff and Customs Code, to charge a 1% duty
on educational, scientific, and cultural books, and a 5% tax on
other books. A Philippine Department of Finance official reportedly
told a group of publishers that the Philippine government would
henceforth interpret the Florence Agreement as requiring that only
books directly “used in book publishing” qualify for duty-free
entry.

¶3. Post first learned of the new tariff in March from the
Association of American Publishers, who mistakenly thought the issue
would be quickly and easily resolved. In May, the issue began to
appear in internet discussions. A few days ago, Philippine Senator
Miriam Defensor-Santiago criticized the violation of the Florence
Agreement, called for a Senate investigation with the support of
four colleagues, and made the issue front-page news.

¶4. In addition to the sudden reinterpretation of the Florence
Agreement, foreign publishers and local bookstores allege that
Customs deliberately slows its assessment of imported books, by
insisting on inspecting each imported book by hand, in order to
increase storage charges. One local bookstore claimed that a
shipment of books worth $10,000 attracted duty of less than $300 but
storage charges in excess of $4,000 while the shipment was
painstakingly inspected.

¶5. As in most commercial disputes in the Philippines, there are
allegations of corruption; it is alleged that Customs officials
prolong the inspection process because they profit personally from
the storage charges. However, most observers believe that the
driving force behind the decision to tax book imports is the
persistent revenue shortfalls in both Customs and the Bureau of
Internal Revenue. Revenue for this year is already hundreds of
millions of dollars behind official targets.

¶6. Comment: Post believes that the tariff is unlikely to survive
the current business, media, and congressional criticism, and that
it will soon be rescinded. However, we will closely monitor the
issue and weigh-in against the tariff at appropriate opportunities.

MEMMOTT

   

 

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