The government needs to impose tougher penalties against tobacco smuggling to address the multibillion peso tax losses incurred due to illicit trade, a lawmaker said.

PBA Rep. Margarita Nograles said the government is losing an estimated P26 billion annually because of smuggled, unregistered, and unregulated cigarettes, which are now sold via container vans shipments.

“If this continues, it will affect our local tobacco industry and roughly 2.2 million kababayans will be affected,” Nograles said in a statement.

Nograles revealed that in some areas like Zamboanga del Sur and Misamis Occidental, it is estimated that six out of 10 cigarettes sold in the market already 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,” Nograles said.

For this reason, Nograles filed House Bill 3917 that seeks to include tobacco in the list of agricultural products covered by Republic Act No. 10845 or the Anti-Agricultural Smuggling Act of 2016.

The bill seeks to amend Section 3 of RA 10845 to include tobacco smuggling—whether manufactured or manufactured including finished products such as cigars, cigarettes, or heated tobacco—as economic sabotage.

It will be 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.

Nograles said that 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,” Nograles said.

“The significant impact was it accounts for six 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,” she added.

Nograles also noted that tobacco production remains very high that from April to June 2022, production of tobacco dried leaves was estimated at 36.38 thousand metric tons, with Ilocos region as the top tobacco producer for the quarter.

HB 3917 is co-authored by House Senior Deputy Majority Leader Ferdinand Alexander Marcos.