Metro Manila (CNN Philippines, November 15) — Two international tobacco companies have urged Congress to fast-track the passage of a measure imposing tougher sanctions on tobacco smugglers, as they sound the alarm over the rise in illicit cigarette trade.
Representatives from Japan Tobacco International (JTI) Philippines and Philip Morris Fortune Tobacco Corp. (PMFTC) told members of the House Committee on Agriculture and Food on Tuesday that the government’s tax collection will take a hit if cigarette smuggling persists.
Ilocos Norte Rep. Sandro Marcos has filed House Bill 3917 which aims to make cigarette smuggling a form of economic sabotage.
It also seeks to amend Republic Act 10845, or the Anti-Agricultural Smuggling Act of 2016, to include raw and finished tobacco products, such as cigarettes and cigars.
The House committee approved the measure during Tuesday’s hearing.
“We believe that the bill, if passed into law, will serve as a strong deterrent against smugglers and counterfeiters of tobacco products and will help stem the tide of illicit trade in this country,” said JTI Philippines General Manager John Freda.
“Euro Monitor has suggested that by 2024, 20% of the Philippines’ market will be composed of illicit products,” Freda also said. “This bill is therefore not only timely, but urgent.”
According to lawyer Noel De Luna of PMFTC, tobacco industry players paid over ₱149.7 billion in excise taxes in 2020, accounting for 6% of the government’s revenue collection.
Freda said smuggled cigarettes could make up 20% of the tobacco trade in the Philippines by 2024.
He expressed alarm over the shrinking market share of legitimate tobacco firms, with sales seen to go down to 60 billion cigarette sticks from 81 billion sticks in 2018.
A pack of smuggled cigarettes reportedly costs only ₱30, which means the government does not collect the ₱55 excise tax imposed per pack of cigarettes.
“The startling spike in smuggled tobacco products in the Philippines compromises the fiscal and social services of the government from its tobacco excise tax collections,” De Luna said.
He added that the illicit tobacco trade is rampant in Mindanao, with 60% of stores selling smuggled cigarettes.
