The government is losing at least P250 billion in revenues a year due to rampant smuggling, according to the FIGHT Illicit Trade (FIGHT IT) movement.
Jesus Arranza, chairman of the alliance of the country’s local industries fighting against smuggling, estimated the value of the said smuggled goods at more than P2 trillion.
Among top commodities being smuggled are cigarettes, Arranza said in a press briefing yesterday.
An industry source said the government is estimated to be losing P24.7 billion in cigarette excise tax alone annually because of smuggling. This translates to 14 percent of the cigarette market being illicit, equivalent to nine billion sticks.
The illicit cigarettes are reported to be manufactured in Cambodia and Vietnam, as well as Indonesia and China.
According to the industry official, for some provinces in Mindanao, 50 to 74 percent of cigarette products in the market are illicit.
Arranza said even if the government was able to earn more revenues when the tax on cigarettes and alcohol were raised, it failed to collect the needed revenues to fund its Universal Healthcare Program.
“The increased tax made the smuggling of cigarettes an even more lucrative business. It may worsen the country’s problem on smuggling,” he said.
The FIGHT IT chief disclosed that people behind the smuggling had levelled up their operations, saying that some brands are no longer smuggled into the country but are “illegally manufactured” in the Philippines.
Arranza claimed the illegal cigarettes are being manufactured inside the Clark Freeport Zone in Pampanga.
“Proof of this was a factory raided by authorities which is supposedly manufacturing cigarettes for export bore ‘Tagalog’ markings in its packs,” Arranza said.
Thus, the anti-smuggling advocates group lauded the approval on third and final reading by the House of Representatives of a bill seeking to declare as economic sabotage the smuggling of cigarettes and other tobacco products into the country and making this a non-bailable offense.
“The approval of House Bill 3917 is a welcome development in this time that the country is in much need of revenues due to a somehow cash trapped economy,” Arranza said.
BIR goes after smuggled vapes
Also yesterday, the Bureau of Internal Revenue (BIR) appraised that the government loses around P1.4 billion in revenue due to smuggled vapes alone.
“The excise tax for nicotine salts is P47 per milligram. So with an estimated 500,000 units per month brought in illegally, with an average of five-milligram content at P47 per milligram, the country loses around P117.5 million per month or P1.41 billion annually,” BIR Commissioner Romeo Lumagui Jr. said.
The BIR filed a criminal complaint against four individuals whose businesses were caught selling smuggled and untaxed vape products.
The operation led to the seizure of approximately 50,000 to 100,000 units of vapes, plus 899 boxes of untaxed excisable articles composed of 175,050 pieces of pods and 61,400 pieces of bottled flavored juice. The estimated value of the goods seized ranged from P15 million to P30 million.
“I hope this serves yet another warning to those who think that they can continue to evade the payment of their taxes. We are hands-on and focused in our job, and we take this very seriously,” Lumagui said.
Apart from the criminal case filed, the accused are likewise facing a civil case deemed instituted in the criminal complaint in the aggregate amount of P1.2 billion, inclusive of fines and penalties.
“The popularity and wide use of vape as a smoking alternative has tempted many unscrupulous businessmen and traders to import and sell them illegally. As a word of advice, they should go through the proper and lawful channels, and make sure that they are in full regulatory compliance. Otherwise, we will confiscate their illegal products and file the corresponding criminal charges against them,” Lumagui said. – Angela Celis
