CIGARETTE smuggling is fueling crime syndicates, harming consumers, and depriving the government of billions of pesos in revenue, an industry group said.
The Federation of Philippine Industries (FPI) said about 20 percent of cigarettes sold in the Philippines are illegal, resulting in a P41 billion decline in tobacco excise tax collections over the past two years.
Last May, the Bureau of Customs seized 5,268 cases, or 53 million sticks, of smuggled cigarettes and heat sticks at the Manila International Container Port from Singapore.
The agency also seized P4.6 billion worth of “FLAVA” vape products from Metro Manila warehouses after the Department of Trade and Industry banned the brand in March.
Bienvenido Oplas Jr., president of Bienvenido S. Oplas Jr. Research Consultancy Services and Minimal Government Thinkers, said cigarette smuggling worsened after the government raised the tobacco excise tax to more than P50 per pack.
Citing the Laffer Curve, Oplas said higher tax rates above a certain point can lead to lower tax revenue. He said the tobacco excise tax reached that point at P50 per pack.
Tobacco revenue climbed to P176.5 billion at a tax rate of P50 per pack in 2021 but fell to P160.3 billion at P55 per pack in 2022 and P134.9 billion at P60 per pack in 2023, he said in a newspaper column.
The government missed its tobacco tax revenue target by P49.3 billion in 2022 and by P109.2 billion in 2023, Oplas said.
The FPI also asked Congress to classify the smuggling of industrial products as economic sabotage following the ratification of the Anti-Agricultural Economic Sabotage Act. The group said smuggling of industrial products should also be a nonbailable offense.
The Senate and House ratified the Anti-Agricultural Economic Sabotage Act, which imposes severe penalties on smuggling, hoarding, profiteering, cartel operations, and other market abuses of agricultural products.
The FPI said smuggling of all products, including agricultural and industrial goods, amounts to economic sabotage.
“Smuggling and illicit trade are not just economic crimes. They are social menaces that erode public trust in our institutions and compromise the quality and safety of goods available to consumers and stifle the growth of legitimate business,” FPI President Jesus Montemayor said at the first National Anti-Illicit Trade Summit on July 25.
Assistant Secretary Carlos C. Carag of the Department of Agriculture’s Inspectorate and Enforcement Office said smuggling threatens the livelihood of farmers and fishery folk.
“Smuggled food products bypass quality control and inspection, payment of taxes to the Bureau of Customs, and discourage local food production. It is an unfair trade practice and should be considered economic sabotage,” Carag said.
The Bureau of Customs confiscated 204 shipments worth more than P41.5 billion in the first half of 2024, including P19 billion in counterfeit goods, more than P13 billion in smuggled general merchandise, and more than P5 billion in cigarettes and tobacco products, said Undersecretary Charlito Mendoza of the Department of Finance’s Revenue Operations Group.
Cigarettes, illegal drugs, counterfeit goods, agricultural products, and other general merchandise were the agency’s top five seized commodities in the first half of 2024, said Paul Oliver Pacunayen, acting chief of the Bureau of Customs’ Intellectual Property Rights Division.
