My column tomorrow will be on Robin Hemley’s latest Dispatch from Manila, as published in Timothy McSweeny’s Internet Tendency. It details the months-long embargo on book importations that resulted from the Bureau of Internal Revenue’s discovering it could reinterpret international treaties with impunity, until booksellers, faced with escalating storage costs, cried uncle and surrendered to the BIR by paying the fees it demanded.
This brings up my past entry, What the?? concerning the long-standing problem any booklovers had with our government -which is, its trying to impose tariffs and duties even though the law grants exemptions to the public and others. A similar series of unfortunate events is recounted by The Curious Couch.
In contrast, blogger-turned member of parliament Jeff Ooi, in a recent entry on income taxes in Malaysia, pointed out the Malaysian government makes book and computer purchases tax-deductible.
Addendum:
The Florence Treaty is also commonly known as the Florence Agreement: see Agreement on the Importation of Educational, Scientific and Cultural Materials, with Annexes A to E and Protocol annexed 1950 as well as Protocol to the Agreement on the Importation of Educational, Scientific or Cultural Materials, with Annexes A to H 1976 Nairobi, 26 November 1976.
Guide to the Florence Agreement and Nairobi Protocol
The Hemley article makes a small mistake, in that Undersecretary Estela Sales is identified with the Department of Customs; she’s actually with the Department of Finance.
Okay, here goes.
First of all, Undersecretary Sales and her team at the DOF spent a lot of time studying the rules/laws/regulations involving this matter beforehand, and found that in Sec. 105 of the Tariffs and Customs Codes, there really is a provision for a 1% duty on imported books (“educational, cultural, etc.”) that are for sale and for profit, and she said that the Florence Agreement was addressed here in this specific section. This 1% has been in existence since way long ago, and in fact, has not been implemented for that long a time. After Undersecretary Sales and her team studied all these laws, the results of this was that this regulation should be followed because it is the law, and forthwith published this information on Easter Sunday 2009, with implementation to follow 15 days after Easter Sunday. From what I understood of what she said, there will be no duty only if these imported books are donations to public schools, readers’ groups, etc., that is, if the books imported are not for sale or for profit. This 1% is for, to use her words, “control/monitorinig” of the imported books coming in. She used the example that if a bookseller brings in P100,000.00 worth of books, the duty on this is only P1,000.00. She told me that she would like to also make clear that vat on books is still 0%, no matter what.
Now, if a book or title does not fall under “cultural, educational, etc.”, then that duty goes up to 5%. However, she points out that the DOF is not the one who determines a title’s labeling of whether it is “educational, cultural, etc.” She said that this labeling belongs to other organizations (she mentioned the DepEd and Unesco).
These laws which she and her team researched were brought up in a respectful meeting with various Congressmen. She said that at first, a number of them were against it, but when she explained that this duty has been in existence in law for so long and really has just not been implemented, they agreed to it. She said that if the Congressmen really want to make it 0% duty for all, then they must pass that law first before the DOF can implement it. In other words, the legislative part of the gov’t, Congress, has to pass it into law before the DOF, the executive branch that “executes” these laws, can enforce it. As of now, after all their study, Undersecretary Sales and her team have seen that this duty exists in law, and they are doing their job in enforcing it.
After this meeting with the Congressmen, Undersecretary Sales and her team also met with various booksellers. She said that her meeting with them was cordial, good, and respectful, as she made all these details clear to them. In other words, her meeting with them went well with no untoward incidents, which is why she was surprised at what came out in the Hemley article. Everything was spelled clearly to the booksellers.
I also asked her about books ordered, say, on Amazon, and picked up at the post office. Should that duty be paid there too? She said, “Yes, but only if that hasn’t been included in the original payment.” In other words, check your receipt and your emails of the online transaction. If duties had already been paid via Amazon or whatever online bookseller, then print that receipt/email and bring that proof with you to show that duties have already been paid. If however your receipt/email doesn’t show this duty, then you are obliged to pay for that duty.
She was particularly disturbed at allegations of “corruption”, because she said she is also head of the DOF’s Revenue Integrity Protection Service, and not just the Revenue Operations Group. In other words, if there are problems of corruption, one can always report this to her department. One can get her department’s contact info over at www.dof.gov.ph.
I hope this fairly airs her side of the matter. For my part, I’m grateful to her for giving me, just a regular guy, the time. It was a good, calm, respectful talk. I treated her with respect, and I am so glad that she did so likewise with me. Frankly, I was afraid that her department wouldn’t since I’m just a regular guy, but she gave me all the information I asked for, and answered all my questions cordially. Like I said, she spent long minutes talking to me during both our lunchbreaks, explaining her points and bringing out concrete data of what went on with her study and what she implemented. I’d like to thank her very much for doing so, and for making clear what all this really means. I hope I did the fair thing and aired her side as completely as I could…
oxar2001law wrote today at 3:03 AMFirst, good news. The word is that the National Book Development Board is as upset about this as we are. I’ll leave it up to the board to come out with a public statement, but it is advised that a calmer climate may help smooth things out before this action becomes irreversible. So, steady vigilance for now, not yet time for the pitchforks.
A few thoughts on the DOF response. International treaties such as the Florence Agreement have the force of law in the Philippines, and are of co-equal status with the Tariff and Customs Code. Congress could not by law repeal commitments made via treaties, you need to withdraw from the treaty. So I disagree with her claim that Congress needs to pass a law amending the TCC to impose the 0% duty on books, that law already exists and is called the Florence Agreement.
Section 105(s) does refer to the Florence Agreement. In my earlier comment, I mentioned that Section 105(s) is not as unequivocal as hoped for, but that ultimately is not a problem. Section 105(s) capitalizes on the title of the Florence Agreement, which refers to “Educational, Scientific and Cultural Materials”, and may give the impression that the exemption from duties only applies to such high-minded reading materials. However, the agreement itself is unequivocal that all printed books are exempt from duties. In any event, it is clear from Section 105(s) that the Bureau of Customs is bound to obey the Florence Agreement, even if the text of the provision itself seemingly pretends that only “educational, cultural and scientific materials” are covered by the agreement.
Readers may be interested in the disputed portions of the Tarrif and Customs Code of 1978, to wit:
s. Economic, technical, vocational, scientific, philosophical, historical, and cultural books and/or publications: Provided, That those which may have already been imported but pending release by the Bureau of Customs at the effectivity of this Decree may still enjoy the privilege herein provided upon certification by the Department of Education, Culture and Sports that such imported books and/or publications are for economic, technical, vocational, scientific, philosophical, historical or cultural purposes or that the same are educational, scientific or cultural materials covered by the International Agreement on Importation of Educational Scientific and Cultural Materials signed by the President of the Philippines on August 2, 1952, or other agreements binding upon the Philippines.
Educational, scientific and cultural materials covered by international agreements or commitments binding upon the Philippine Government so certified by the Department of Education, Culture and Sports.
Our tax laws obviously have almost everything covered. The problems are that we have a very small tax base, because of the very low income levels of the vast majority, and we have very poor enforcement, allowing big tax cheats to escape via bribery or loopholes.
i’m wondering why no one has complained or at least written about this situation in the newspapers. why did it have to take a foreigner to write about it in a foreign publication? could it be that filipinos don’t really care about books anymore? or are publishers afraid that the BIR will make life difficult for them if they speak up in public?
The internet will save us. There’s an entire library available out there for both legit and ‘pirated’ books. By legit, I mean the authors themselves made the books available online for free, as well as those in the public domain.
No wonder some of the books I’ve been looking for took a while before they hit local bookstores.
This is an outrage! Too bad we are not a book-reading society, otherwise, the greedy customs officials would’ve never gotten away with this.
i think it’s fear of the authorities and how vindictive they can be.
Yes, I was surprised about this too.Fear of authorities? Jesus! We fear an undersecretary now?
“the Philippines is one of the largest markets for books written in English in the world and new bookstores with such names as Power Books and Fully Booked have been cropping up all over metro Manila in recent years to compete with the ubiquitous and aptly named National Bookstore.”
Another surprise when all we hear is that Filipinos don’t read. Filipinos do read, just not the self-conscious and intellectually castrated local crap.
There’s been a development since the waning years of Marcos where as he lost touch and control, underlings in a sense became “empowered.” the capacity of bureaucrats to defy and ignore high officialdom can be quite amazing, and increasingly people have learned that our old culture of asppeal to upstairs to sort out officious bureaucrats no longer works; you have to appeal to and curry favor with, officials up and down the line. but it has happened so steadily and for so long a time no one has quite figured out it’s a remarkable phenomenon.
Nobody would argue we’re not some sort of democracy. But what is this shortfall business. The president sets a tax target and of course target will not be met. it’s a worldwide recession.
The booksellers and book buyers should contest. Art. 10 of the Civil Code should control. The very idea that the only tax-exempt books are the “books used in publishing” and that this means that just about all books are dutiable are certainly the opposite of “right and justice.”
Most of the time, the customs is guided by the very principled and highly trustworthy groups that protect the interest of giant local publishers and paper mills. So now, if you’d care to notice, we have locally published books that not only have superb content quality but also printed on high quality, locally manufactured paper that is either newsprint (high bright due to excessive use of OBA – optical brightemers, ie chlorine) or uncoated woodfree paper bombarded with a generous splashing of the same chemical. There is no consideration of glare free paper, body, texture, etc.
When Europe and the US have adopted TCF (totally chlorine free) paper production.
Jakarta has a more developed publishing/printing industry I believe. I recently got some books, paperbacks/hardbound, of novels, Warren Buffet, etc. but printed in their language…
Does the solution lie in the Ombudsman’s office to set things right “…for the greater good” and in conformance with current Pinas laws?
This is one of those (many) times that you want a Pinas businessman to call GMA (or a Congressman or Senator “buddy”) to get a politician to intercede.
ramrod, you’re referring to protectionism and local paper/pulp industry?
Our own publishing business is crap. Very, very poor quality at higher price. Just look at the books of anvil.
brian, many reasons for this, chief among which is impossibility of economies of scale.
Thanks for the link-slash-praise sir, and thank you as well for helping the issue gain mainstream media attention. I do hope that people with first hand knowledge of the same will see the concerns articulated on the web and speak their mind: education is key to solving almost any of the nation’s problems and reading (any reading) encourages that like nothing else.
@BrianB: re: Anvil – Are you speaking of content or the actual physical material of the book? Content-wise Anvil has content that many consider to be brilliant stuff, like Dean Alfar’s “Kite of the Stars” and Ambeth Ocampo’s books. As for the actual material of the books, a lot of Anvil books come in two versions: one uses high grade paper and is more expensive, while the other uses lower-grade paper and is less expensive. The budget version of Ocampo’s “101 Stories on the Philippine Revolution” sells for PHP275, not bad at all for a 312 page tome from an established author. So I can see someone having an issue re: the quality OR the price but not both at the same time.
@pipe : re Anvil
I believe brian is referring to the quality of material not the content. From what I see the local publishing industry will be seeing some improvement on this matter once alternatives to the newsprint and coated/uncoated woodfree paper are introduced. Cost is the main issue why our locally printed books seem to be uncompetitive quality-wise, we’re using coated paper (90/100gsm) for high end and uncoated woodfree (70/80gsm) or even bulky newsprint. Modern paper technology has advanced in a way that the required bulk, printability, glare, texture, etc. can be achieved and at the same time bring down costs via high bulk/high yield substrates.
MLQ3, economies of scale can be addressed via digital printing, of course the introduction of digital bookpaper is the key.
Hopefully, we’ll see some improvement in the months to come regarding this matter. That is, is the local pulp and paper industry (pulpapel) will not sic the customs on hapless importers.
ramrod, but isn’t state policy protectionist of local paper/pulp? my understanding is printing industry locally is in a slump, prices are down because job orders are down. i just don’t see how the unit costs can be brought down in a manner that say imported publications enjoy: a bestseller, locally, is 1k copies a year, a major bestseller is 5k copies a year. this is achieved by some titles in the categories that sell well (jokes and puzzles, self-help, cooking) but for literature and history, etc. a few hundred copies a year may be all that’s manageable. far as i know, only one print-on-demand provider exists, too… so how does this work out?
mlq3, hmmm, for now I’m not so sure myself. I will be meeting some publishers next week…hope to get some insights from them. What I’m thinking about is perhaps exploring some possibilities that imported publications could be printed here (outsourced) I’ve seen it being done in Indonesia and Malaysia, and to attempt to answer your question re unit cost – its possible to use a high bulk, low weight, high yield paper (same paper imported publications are using) and see if it can help…then again, I’ll have to wait for reactions from people in the industry.
mlq3, you’re right also, state policy is protectionist of the local paper/pulp, unfortunately the customs rely on this group’s input and lately I found out they were using outdated valuations (November08), I had to give them a copy of the updated pulp and paper monitor…tsk,tsk, all that budget but can’t afford to subscribe…
Local pulp/paper is in a quandary also, they are using old, inefficient machines, the price of power increased, along with other raw materials…they can’t afford to bring down prices but imported paper from China/Indonesia are coming in very cheap.
ramrod, well not all publishers are the same. some have their own presses, others are at the mercy of the presses. some presses, too, have access to their own paper, and others, have to rely on presses that import paper. and at the end of it, except for textbooks, hardly any titles would be published on a scale that justifies large-scale importation. which is why for high-quality books it often makes more economic sense to go to hong kong or thailand or even singapore and have it done there -because there are also quality-control issues, which makes tangling with customs even worth it.
In the first quarter alone I know of one press that imported 7000mt of paper of DECS.
Thanks for the input though on local publishing/printing scenario, now I’m better prepared.
If you’re shopping for a press, let me know, as long as its ASEAN 🙂
Pipe, yes material. No idea if all Anvil books are crap or not inside. They could be inventive. they do not have to put out books in similar dimensions as foreign paperbacks. Whatever is cheapest as long as cover is flexible (Anvil books are like fake leather shoes. It hurts the human body) and the paper readable and white enough. Cover art should also conform to the limitations of material. More black on white, sketches rather than water colors or oil.
Bookbigayan 2009
http://uneditedmara.wordpress.com/2009/05/13/bookbigayan-2009/
BrianB,
I never would have known the extent of this problem if I had not met the people from Anvil, Cacho, and a representative from a prominent printer this week.
For lack of available alternatives, we are using the local “mechanical bond” the white paper material locally produced, normally 70gsm, made from wastepaper (white). Its not really “mechanical” in the real sense as it doesn’t contain any mechanical pulp, “uncoated woodfree” would be more approriate. Being “not” mechanical its Opacity is quite low hence the “see-through” quality of locally printed books (you should see the textbooks). The other alternative is “newsprint” or hi-brite newsprint.
If there is a need for better quality, the printers will buy the “stocklots” bookpaper mostly from Japan, another word for rejects really, but its cheap. The problem with using this grade is that its not always available, now you have them, next time you don’t.
What really needs to be done is to introduce quality book paper, ones used in the UK, US, or even in Malaysia, HK, and Jakarta. For text prints, the creamy paper is ideal, and instead of using the 70gsm (bulk 1.0) we can use the 55gsm (bulk 2.0), mechanical paper or genuine bookpaper. Using lighter paper means cost savings as the price is by metric ton (paper reel) and higher bulk gives the book its body, the paper its texture, and improved printability. This would even make our local printers “competitive” in the export market and position ourselves as a potential “outsourcing” for publishing, printing, etc.
If all goes well, we will see an improvement in this area before the year ends…
that would be fantastic news, ramrod, how will you get around opposition from, say, tipco and printown?
The ball is rolling as we blog. A local distributor is going around the publishers/printers to promote and introduce the product, we’re going to hold a seminar on paper technology this coming bookfair, and yours truly is going to do a lot of back selling to DepEd. Of course, Tipco and Bataan, not to mention Pulpapel will be an obstacle because of their influence on customs policy, hence the need to find some allies in DepEd. Also, I may need to get Printtown on our side, its my old employer, may not be easy…but good intentions never are…
ramrod, your problem there is that printown would source its paper from tipco?
Printtown buys paper from both Tipco and Bataan (they own part of Bataan). Printtown also imports paper that is specified by customers or project. The problem here is the duties difference, if is ASEAN source, meaning Indonesia, Thailand, even China the duty will only be 3%, but its 7% if its from Europe. In my experience also, customs goes into a selective total inspection mode, causing delays in clearing certain shipments apparently upon Pulpapel influence.
Then again, its a matter of communicating to DepEd, NBDB, the details of bookpaper, its technical properties, specs, and they’ll see that its not available locally, or even in ASEAN.
but that makes sense only for large-volume printings, with customers able and willing to import or to make it worth the while of the printer to source and propose. for many small publishers, the delights of better paper are simply too huge a cost to contemplate. 🙁
hope and prayed for to have more rene agulan in boc whom can stop gov’t losses in tariff and taxes ( 50 yrs for booksellers );more power to mlq III ur attention to this topic guide our lawmakers to to seat on legal matters
rogeescogs