Illegal cigarettes cost gov't P26 B

Published April 7, 2022, 2:56 PM

by Chino S. Leyco

The Philippine government is losing about P26 billion in taxes every year due to illicit cigarettes, a House lawmaker said.

During the Combating Illicit Tobacco Trade webinar on Thursday, April 7, PBA Party-list Rep. Jericho Jonas B. Nograles said that based on the Euromonitor International report, about 13 percent of the cigarettes sold in the Philippines were illegal.

He revealed the rampant black market in Mindanao, particularly in Misamis Occidental, where illicit cigarettes account for 57.2 percent of the market.

Nograles added that Zamboanga Sibugay is also dominated by illicit cigarette brands holding 50.6 percent of the market, while in Sultan Kudarat it at about 35.6 percent.

“Euromonitor estimates in some areas in Mindanao, six of 10 cigarettes sold in retail are illegal,” Nograles said.

Untaxed cigarettes are “easily obtainable” in Mindanao due to “abundance of illicit tobacco products,” Nograles said.

Outside Mindanao, illegal tobacco trade is also prominent in Bataan (31.6 percent), Palawan (24.8 percent), Nueva Ecija (22.2 percent) and Zambales (11.5 percent,) according to the lawmaker.

It is possible to buy a single pack of illegal cigarettes for as little as P35 in retail stores, way below the estimated minimum price of tax-paid brands of P72 per pack, and the P62 per pack excise tax, he said.

In February, the Bureau of Customs reported to Congress that most smuggled brands in Mindanao are Astro, Canon, Fort, San Marino, Delta, Oxford, Two Moon, New Berlin, Famous, Union, Premiex, Commando, and Guiang Baru.

Other brands proliferating in the country, particular in Mindanao, are Bros, Wilson, Nelson, Billionaire, R&B, Nograles said.

In 2021, the Bureau of the Internal Revenue collected nearly P180 billion in excise taxes from the tobacco industry.

The BIR also estimated that the government is losing P3.8 billion in revenues from 2018 to 2021 due to illicit trade.

Specifically, P1.614 billion in 2018, P406 million in 2019, P1.6 billion in 2020, and P123 million last year.

Meanwhile, the Customs’ apprehensions on illicit tobacco products reported foregone excise taxes of P2.9 billion from 2019 to 2022.

More specifically, P297 million in 2019, P1.5 billion in 2020, P1.032 billion in 2021, and P67 million early this year.