The chairperson of the House of Representatives Ways and Means Committee is planning to introduce a measure that would effectively address the rampant cigarette smuggling, estimating that the revenue losses would reach PHP60.6 billion this year if the current illicit trade persists.

In a message during a multisectoral discussion on Tuesday, Albay Rep. Joey Salceda said he would propose a comprehensive tobacco illicit trade bill that addresses everything from smuggling through the de minimis loophole and the country’s economic zones, to leakage of tobacco declared for export or transshipment, as well as the manufacture of fake cigarettes.

“We must attack the problem in its complete form – in every stage of the value chain,” he said.

He pointed out that there is a problem in the collection of cigarette excise tax, noting that the 2022 collections declined to PHP160.4 billion from PHP173.9 billion in 2021, or a reduction of PHP13.5 billion.

He said the government also missed the 2022 target of PHP191.6 billion by PHP31.2 billion.

Illicit cigarettes, he said, are “easy to come by” in every segment of the market and every venue for selling.

“There is no challenge to buying these brands. And they sell at as low as one-fifth the price of licit cigarettes. Walang kalaban-laban ang matino (The legitimate ones don’t stand a chance),” he said. “Even fakes of premium brands are becoming easier to come by. From the same online shopping sites, fakes that are half the price and, supposedly, of the same flavor, are sold openly.”

He also highlighted that the health costs of smoking-related diseases are PHP188 billion this year, arguing that the cost could decline to as low as PHP150.9 billion without illicit tobacco trade.

Until the issue of illicit trade in cigarettes is resolved to a significant degree, he said, there would be hesitation among the public to support further tax increases in tobacco.

“In the meantime, the revenue base will continue to shrink and there is a chance that prevalence might actually increase as a result of cheaper illicit alternatives. This is a serious national crisis. For better or for worse, our advocacy of higher taxes played a role in making the illicit sector more attractive. We have a responsibility to help solve this problem,” he said. (PNA)

Photo credit: Office of Rep.Joey Sarte Salceda