At least half of all cigarettes sold in Mindanao were smuggled, depriving the government of much needed revenues to fund basic services, the anti-smuggling advocacy group FIGHT Illicit Trade Movement (FIGHT IT) said.
Jesus Arranza, FIGHT IT chairman said cigarette smuggling in Mindanao has worsened, noting that 50 percent to 74 percent of all tobacco products sold in Mindanao provinces come from illegal sources.
This rampant smuggling deprived the government some P24.7 billion in excise taxes, Aranza estimated. Based on industry’s monitoring, illicit cigarettes come from Cambodia, Vietnam, China and Indonesia.
Aranza said the viability of the country’s legitimate cigarette manufacturers is now being challenged by the unabated smuggling, not only in Mindanao but across the country.
Smuggled cigarettes are sold at P2 per stick, easily undercutting legitimate cigarettes by not paying excise taxes. The lowest priced tax-paid cigarette is sold at P6 per stick.
Industry estimated that the government is losing at least P250 billion revenues a year due to rampant smuggling in the Philippines.
“This unlevel playing filed not only adversely affects local cigarette manufacturers, but exposes to great risk tobacco farmers,” he pointed out.
Arranza also noted that even if the government was able to earn more revenues when the tax on cigarettes and alcohol were raised, it failed to collect the needed revenues to fund its Universal Healthcare Program.
“The increased tax made the smuggling of cigarettes an even more lucrative business. It may worsen the country’s problem on smuggling,” he stressed.
The FIGHT IT chief disclosed that the people behind the smuggling had levelled up their operations. In fact, he added, some brands are no longer smuggled into the country but are “illegally manufactured” in the Philippines.
To make the matter worse, Arranza said, the illegal cigarettes are being manufactured inside the Clark Free Port Zone in Pampanga.
Proof of this was a factory raided by authorities which is supposedly manufacturing cigarettes for export bore “Tagalog” markings in its packs, he said.
This prompted the Center for Research and Communication Foundation, Inc. to conclude that illicit trade for cigarettes goes beyond smuggling and tax evasion, he said, noting the fact that another injury to the Philippine economy is the extensive sale of counterfeit cigarettes.
Arranza asked everybody to join FIGHT IT and the government efforts in ending the smuggling in all its form and entirety, putting behind bars the people involved in this vicious social and economic menace.