THE Philippine Tobacco Institute (PTI) has sounded the alarm over a surge in illicit tobacco products, with industry data showing their share of the total tobacco market rose to a record high of 18.2 in 2024.
In a statement on Tuesday, the organization of legitimate tobacco manufacturers, importers, exporters and growers in the Philippines warned the situation is nearing a tipping point and may soon become “irreversible” if left unchecked.
The PTI showed the comparative share of illicit cigarettes in 2020 stood at just 5.4 percent, marking a staggering 240 percent increase in just four years.
In 2023, the illicit tobacco incidence was estimated at 13.2 percent.
PTI further said that in Mindanao, illicit incidence has jumped to 50 percent, topped by the province of Lanao del Sur at 94 percent.
Central Luzon remains as the hotbed of illicit cigarettes in Luzon, led by Bataan at 63 percent, Pampanga at 20.2 percent and Tarlac at 17.5 percent.
“Today, one in every five cigarettes sold in the country comes from illicit sources,” PTI president Jericho Nograles said in the statement.
“While we commend the efforts of the Bureau of Customs (BOC), Bureau of Internal Revenue (BIR), Philippine National Police and the Department of Trade and Industry, the sheer scale and geographic spread of illegal tobacco and vape products continue unabated,” he added.
Nograles said the proliferation of illegal tobacco is destabilizing government revenues, undermining public health goals and displacing legitimate tax-paying industry volumes.
PTI said this surge in illicit activity has caused a steep decline in legal, tax-paid tobacco volumes to 43.8 billion sticks in 2024 from 69 billion sticks in 2020.
Excise tax collections from tobacco amounted to P134 billion in 2024, falling short of the P141.73 billion program as stated in the Budget of Expenditures and Sources of Financing for 2025.
PTI said there is a glaring price disparity between legal and illegal cigarettes.
The cheapest legal cigarettes are sold as low as P40 per pack while legal, tax-paid cigarettes are sold at around P140 per pack.
The P100 price gap drives consumers away from legal products and toward unregulated, untaxed alternatives, PTI said.
“There is overwhelming evidence that illegal tobacco and vape products are exploding across the country,” Nograles said.
“With annual tax hikes making legal products less affordable, consumers are not quitting—they’re switching. Worse, these illicit products are now being openly sold to minors and widely distributed online with little to no regulation,” he added.
PTI said illegal cigarettes are sold below the excise tax rate of P66.15 per pack. With an annual increase of five percent, rising taxes are driving consumers to illicit products, the organization said.
“The policy to reduce smoking through annual tax increases has failed. Instead of purchasing legal cigarettes, consumers have switched en masse to cheaper illicit cigarettes,” Nograles said.
“There is an urgent need to calibrate the tax rate to an optimal level and enhance enforcement and prosecution efforts so we can fully realize the benefits of the Sin Tax Law for both public health and government revenues,” he added.
PTI has expressed strong support for measures proposed by Senator Sherwin Gatchalian, including strengthening coordination between law enforcement agencies and local government units, imposing a unified tax rate on all vapor products, mobilizing the Anti-Money Laundering Council, convening the Anti-Agricultural Economic Sabotage Council, enhancing enforcement against e-marketplaces and improving prosecution and conviction rates by the BOC and BIR.
“The PTI and its members stand with the government in seeking urgent and sustainable solutions to this growing threat,” Nograles said, adding, “If we do not act decisively now, the damage to our fiscal health, public welfare, and the rule of law may soon be beyond repair.”
