Creation of inter-agency linkages among the Philippine Economic Zone Authority (PEZA), Bureau of Internal Revenue (BIR), and the Bureau of Customs (BOC) could curb illegal tobacco trade and could generate much-needed revenues to fund government projects of the new administration.
Party-list congressman Jericho Jonas B. Nograles has raised this recommendation stating this could plug loopholes as there will be an alignment of regulations on company product registration, export, and transshipment bond requirements, and general coordination among these agencies.’
Nograles, who is chairperson of the House Ways and Means Committee on the Illicit Tobacco Trade and Agricultural Smuggling, underscored the importance of clarifying BIR’s limits of enforcement in free trade zones, the deployment of revenue officers on the premise, and appointing third-party auditors and installation of CCTVs.
Another suggestion from the Ways and Means Committee is the publication and information dissemination of BIR-registered brands to help public and local authorities to identify illegal brands in the market.
“The DILG should exercise power of supervision and direct LGUs to be more vigilant against illicit trade, or be considered as complicit. Same with the NAPOLCOM,” Nograles recommended.
Nograles further advised that strengthening enforcement efforts and ramping up cooperation are key tasks in eradicating the illegal tobacco trade. This includes improving intelligence sharing between agencies and implementing stringent frameworks for the prosecution and conviction of illegal traders. Awareness campaigns, such as that of the NTA and its partner agencies, are also crucial in decreasing the demand for illicit tobacco products.
In raising his proposals, Nograles cited huge revenue loss from illicit tobacco trade, estimated at P26 billion annually.
“In comparison this is almost the annual budget of the Department of Labor and Employment (P37.1 billion), or the National Irrigation Authority (P31.7 billion). This amount that the government loses to illegal tobacco trade can already be used to fund construction of 10,000 school buildings,” said Nograles.
Citing a Euromonitor report, Nograles said that six out of every 10 cigarettes being sold in Mindanao are illegal amid an abundance of easily obtainable and cheaper illicit sticks. “Smuggled cigarettes cost only P35 a pack or P2 per stick — nearly half the price of tax-paid packs worth P72,” Nograles said in a statement. .
BOC Assistant Commissioner Atty. Vincent Philip C. Maronilla said that from 2019 to date, the BOC had apprehended a total of P8.08-billion worth of smuggled tobacco products which deprived the government of P2.98 billion in taxes, a small drop in the bucket compared to the actual amount lost through illicit trade.
During the first quarter of 2022, the Intelligence Group (IG) and Enforcement Group (EG) of BOC reported that P132.56 million worth of cigarettes were seized as a result of the agency’s anti-smuggling efforts.
According to the International Monetary Fund (IMF), the annual revenue loss in tobacco taxation worldwide is at $40-50 billion, estimated to be about 600 billion cigarette sticks, or 10 percent of global consumption.