NUEVA Ecija Rep. Mikaela Suansing yesterday defended the House-approved bill seeking to lower excise taxes on tobacco, saying it is projected to yield an aggregate revenue recovery of P66 billion in five years and discourage people from smoking.
The lawmaker, a sponsor of House Bill No. 11360, said the proposal will hit two birds with one stone by “stopping the rise of smoking rate and preventing the slide of excise tax collection.”
The bill, which was approved last February and principally authored by Albay Rep. Joey Salceda, proposes the creation of the Inter-Agency Tobacco Illicit Trade Council, which will be chaired by the Department of Finance, to implement measures curbing illicit trade of cigarettes and vapor products and to strengthen enforcement.
Sen. Sherwin Gatchalian, chair of the Ways and Means Committee, earlier vowed to block the passage of the bill, which seeks to introduce amendments to certain provisions of the National Internal Revenue Code.
Gatchalian has said the proposal will not address the cigarette smuggling problem in the country because effective law enforcement operations and the prosecution of suspects in illicit tobacco trading would be a more effective move to stop it.
He cited data from the committee’s April 2 hearing which showed the Bureau of Customs (BOC) had 1,296 seizures but only had two convictions while the Bureau of Internal Revenue (BIR) had 1,785 seizures but had only one conviction, saying that while law enforcement is being undertaken, the problem lies in terms of prosecution and winning the cases in courts.
Government revenue from excise taxes on tobacco products has been steadily falling since reaching P176 billion in 2021. In 2024, the Bureau of Internal Revenue (BIR) collected only P134 billion, falling short of its P185 billion tobacco excise tax target by P52 billion, affecting the funding of crucial government programs, including healthcare services.
The drop in revenue was accompanied by rising smoking prevalence in the Philippines and the adult smoking rate increased from 18.5 percent in 2021 to 23.2 percent in 2023, which is largely attributed to the growing illicit trade.
In a statement, the Philippine Tobacco Growers Association (PTGA) underscored the need to reduce the advantage of smuggled cigarettes over local brands, backing HB No. 11360, saying it will help curb the proliferation of illicit cigarettes and vapes in the country.
The PTGA said the illicit trade poses a significant threat to the livelihoods of about 40,000 farmers dependent on tobacco cultivation, stressing that the successive increases in excise taxes on tobacco products “have inadvertently fueled the growth of the illicit market, making it increasingly challenging for local growers to compete.”
“Despite our commitment to producing quality crops and goods, we find ourselves struggling under the burden of escalating taxes imposed by the government,” PTGA said.
The group explained that the decline in the demand for locally-produced tobacco is attributed to the widespread availability of smuggled cigarettes, which do not utilize locally grown leaves.
“The PTGA reported that while 80 percent of their sales are for export, this market has also been impacted by the surge of illicit tobacco domestically. “Our earnings would be better if only legitimate and local cigarettes were sold in the market,” PTGA said.
National Tobacco Administration (NTA) administrator Belinda Sanchez said the continuing proliferation of illegal tobacco sales in the local market is causing a decline in government revenue.
“This reduction in funds limits the resources available for essential public services, particularly universal health care,” Sanchez said. “Moreover, proceeds from illegal tobacco sales are often linked to organized crimes, further threatening national security,” she said.
Sanchez also said that over 430,000 farmers, farmworkers, and their families are directly affected by the increasing prevalence of smuggled and counterfeit tobacco products.
“There is an urgent need for a multi-faceted approach against illicit trade that includes strengthening national policies, enhancing regional cooperation, improving enforcement mechanisms, and increasing public awareness,” she said, noting that the illicit tobacco trade also affects the 2.2 million Filipinos whose livelihoods depend on the tobacco industry.
