Seven in 10 cigarettes in the Philippines are smuggled, according to Jesus Arranza, president of the Federation of Philippine Industries (FPI).
Arranza was quoting highlights of a study conducted by the University of Asia and the Pacific which said smuggling of cigarettes has led to P22 billion losses to business and P84 billion in foregone revenues to government coffers.
The study conducted four months ago was commissioned by FPI through advocacy group Fight Illicit Trade.
According to Arranza, the study has established the correlation between higher taxes and smuggling, a point he stressed in congressional hearings raising excise taxes on tobacco.
“Simply imposing taxes on an industry can result in financial constraints,” Arranza said, adding collaboration between government agencies and international bodies on the impact of taxes is necessary.
In studies conducted five years ago, Arranza said smuggling in general led to losses of between P200 billion and P250 billion. The staggering amount leads to closure and downsizing of local producers and eventually job losses and in turn, to lesser purchasing power of consumers.
“Those are the ripple effects of smuggling,” he said.
Arranza said revenues raised from cigarette taxes are supposed to fund the Universal Healthcare program of the government but instead, “the money goes to smugglers.”
