House of Representatives (Ellson Quismorio/ MANILA BULLETIN)

The calls to hold an investigation on the discovery of P1.428 billion worth of alleged illegal electronic e-cigarette products within a Valenzuela City warehouse are beginning to snowball in the House of Representatives.

Cagayan de Oro 2nd district Rep. Rufus Rodriguez filed House Resolution (HR) No.1437, which directs the appropriate House Committees to conduct an inquiry on the discovery of the e-cigarette products marked "Flava".

Rodriguez said the purpose of such House probe is to "[abate] the proliferation of illicit trade by introducing remedial legislation as may be necessary".

This followed pronouncements from Albay 2nd district Rep. Joey Salceda last week that the warehouse raid could lead to Flava being slapped with a P728-million tax evasion case, based on his suspicion that the discovered e-cigarettes had been imported illegally.

"If found liable of excise tax evasion, the excise tax due is subject to a penalty of 10 times the amount. That’s under Section 263 of the Tax Code. So, really, on the warehouse raid alone, you could be looking at a penalty of P7.28 billion. Once we factor in all past offenses, the amount could be staggering,” Salceda earlier said.

“We will investigate the matter as soon as possible, to see the extent of the fraud and tax evasion," he said.

Rodriguez, in HR No.1437, noted that the collection of excise tax on the production, sale or consumption of a commodity is one of the major sources of revenue for the government.

He said that according to the latest study by the University of Asia and the Pacific, government losses from illicit cigarette trade will likely jump to P43 billion over the next four years if enforcement will remain weak, and with the entry of the contraband commodity

worsening.

"Illicitly traded goods and the foregone revenue from the non-payment and non-collection of excise tax takes away from the government a sizeable chunk of money that can be used to fund its social services and infrastructure programs," Rodriguez said.

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He said the inspection of Bureau of Customs (BOC) operatives in a warehouse in Valenzuela City last Oct. 27 led to the discovery of P1.428 billion worth of alleged illegal e-cigarettes or vapes.

The same inspection yielded some 14.000 boxes containing over 1.4 million pieces of lO milliliter (mI) disposable e-cigarettes that have a value of P700 million and P728 million in taxes.

BOC Commissioner Bienvenido Rubio said each of the e-cigarettes is valued at P500 per piece, which translates to P700 million in total, while its excise tax amounts to P728 million as per the P52 excise tax per one ml of e-cigarette.

"It is imperative for the government to assess the scale of illicit trade in tobacco products, heated tobacco products and vapor products in the country, identify the causes thereof, and adopt measures to combat the same," Rodriguez reckoned.

Gen Fabro is the chief executive officer (CEO) of Flava, dubbed the Philippines’ top vape brand.