QUEZON CITY – The government is losing at least P26 billion in revenues each year due illicit trade of tobacco products.
With the big loss in revenues, the country is deprived of much-needed funds to support various government programs.
This startling revelation was made during the hearing of the House of Representatives Committee on Agriculture and Food by PBA Party-list Rep. Margarita Ignacia Nograles.
Nograles told the hearing the government is losing billions in revenues because of the uncollected excise taxes from the smuggled tobacco products.
“The government revenues are lost from smuggled, unregistered, and unregulated cigarettes which are being sold via container vans shipments. This resulted in an estimated PHP26 billion in financial losses annually. If this continues, it will affect our local tobacco industry and roughly 2.2 million kababayans will be affected,” Nograles pointed out.
To stop the big losses in revenues, Nograles, together with Presidential son and Ilocos Norte Rep. Ferdinand “Sandro” Marcos, are urging the passage of bill imposing tougher penalties on tobacco smuggling by amending some provisions of Republic Act 10845 or the Anti-Agricultural Smuggling Act of 2016.
The bill seeks to include raw and finished tobacco as agricultural commodities whose illegal importation constitutes economic sabotage, which is punishable with life imprisonment and a fine of twice the fair value of the smuggled agricultural product and the aggregate amount of the taxes, duties and other charges avoided.
The panel, chaired by Quezon Rep. Wilfrido Mark Enverga, approved the measure.
In sponsoring the bill, Nograles said tobacco farming remains a primary source of livelihood for so many Filipino farmers despite the increase in excise taxes for the sale of tobacco products.
“The tobacco industry is a common source of income for many Filipinos. This contributes to around 516,000 labor force in 2019 and around 2.2 million Filipinos generated earnings from the industry. The significant impact was it accounts for 6 percent of tax revenue in 2020, and 58 percent of so-called sin tax receipts are being used to finance the national health budget – including the universal health care resulting in 8 million more low-income families receiving health care under this program,” Nograles said.
Despite tobacco production remaining very high, she said local tobacco farmers and legitimate tobacco product manufacturers are not only suffering economically because of the high excise tax imposed by the government but also because of the massive amount of tobacco products that are smuggled into the country by unscrupulous importers and traders.
Nograles and Marcos said in some areas in the Philippines, namely Zamboanga del Sur and Misamis Occidental, it is estimated that six out of 10 cigarettes sold in the market come from illegal sources.
“Almost daily, there are new reports of seized illegal cigarettes by the Bureau of Customs in Mindanao and this is just the tip of the iceberg. Even in the tobacco-producing region of Ilocos, nearly 10 percent of the cigarettes sold are illicit,” they said.