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Philippines: ‘Government loses P26 billion from illicit cigarette trade’
MANILA, Philippines — The government’s top two revenue offices have forfeited an average of P1.67 billion in taxes due to the illicit trade of cigarettes, but a legislator warned authorities have yet to infiltrate the P26-billion market for fake tobacco.
Bureau of Internal Revenue (BIR) director Beverly Milo yesterday said the agency recorded tax losses of P406.87 million in 2019, P1.6 billion in 2020, and P123.25 million last year due to the production of contraband cigarettes and fake internal revenue stamps.
The BIR confiscated a total of 3.19 million cigarette packs in 2019, 4.89 million in 2020, and 2.47 million in 2021. It also seized 8.44 million tax stamps in 2019, 30.66 million in 2020, but none last year.
On the other hand, Bureau of Customs (BOC) assistant commissioner Vincent Philip Maronilla said the agency posted tax losses worth P297.19 million in 2019, P1.51 billion in 2020 and P1.08 billion in 2021 due to tobacco smuggling. During the period, the BOC confiscated 127,243 master cases of fake cigarettes with a market value of P7.95 billion.
The BIR and Customs registered combined tax losses of P704.06 million in 2019, P3.11 billion in 2020 and P1.21 billion last year. The revenue collectors claim to have suffered an average of P1.67 billion in foregone revenues from the illicit trade of cigarettes in the past three years.
However, Rep. Jericho Nograles of PBA party-list said the government loses at least P26 billion to the production, importation, and distribution of fake tobacco nationwide.
Nograles, who heads the House technical working group on illicit tobacco, said about 13 percent of the cigarette market in the Philippines falls outside state monitoring.
Citing data from Euromonitor, Nograles said at least half of smoking products sold in areas like Misamis Occidental and Zamboanga Sibugay are illegal, costing the government the revenues it requires to fund public infrastructure and social services.
On the legislative end, Nograles said the next Congress could look into the tax rate imposed on cigarettes and similar smoking items. Due to increasing taxation, he argued that the government might be driving smokers to purchase inauthentic brands to the benefit of smugglers.
Under Republic Act 11346, the government slapped an excise tax of P45 per pack of locally manufactured cigarettes in 2019, going up by P5 every year until it reaches P60 in 2023. From 2024 onward, the tax rate will go up by five percent annually.
Milo and Maronilla, for their part, said that the estimated losses computed by Nograles could be true in spite of data discrepancy, especially as authorities have yet to cover the entire market of fake cigarettes.
Since 2019, the BIR has filed 13 charges against tobacco manufacturers found evading their tax duties, while the Customs lodged 29 cases against cigarette smugglers in 2020 and 2021.
Source: https://www.philstar.com/business/2022/04/08/2172993/government-loses-p26-billion-illicit-cigarette-trade