Senator Sherwin Gatchalian (Senate PRIB)

Senator Sherwin Gatchalian on Monday, April 17, sought a Senate probe to address the rising incidence of illegal trade involving excisable products worth billions of pesos in a bid to arrest revenue leakages and protect the health of consumers. The government imposes excise tax on alcohol, tobacco, cigarette and vapor products, petroleum products, automobiles, non-essential goods and services, sweetened beverages, and mineral products. “Smuggling of these products is fast becoming rampant and deprives the government of much-needed revenues necessary to finance various programs and projects and sustain economic growth and development,” Gatchalian said as he filed Senate Resolution (SR) No.566. The resolution, according to Gatchalian, seeks to promptly assess the scale of illicit trade in the country, adjust enforcement agencies’ priorities and border restrictions, and introduce remedial legislation necessary to address revenue leakages caused by the smuggling of excisable products. “The rising incidence of illicit trade on excisable products also poses a great risk to the health of consumers when substandard products are manufactured using dangerous and unapproved ingredients,” the senator added. The government in March incurred revenue losses amounting to P1.4 billion due to various brands of smuggled cigarettes in Sulu. Also last month, the Bureau of Customs (BOC) Port of Cagayan de Oro foiled an attempt to smuggle two containers of cigarettes valued at P160 million. In February, authorities seized P600,000 worth of undocumented cigarettes in Dipolog City, Zamboanga del Norte and some P2 million worth of suspected smuggled cigarettes in Cauayan, Negros Occidental. Gatchalian, chairman of the Senate ways and means committee, cited that as much as 42.8 percent of total cigarette consumption in the country from 2009-2017 came from illicitly traded tobacco products, based on a study entitled “Measuring Illicit Cigarette Trade: The Case of the Philippines” published in 2021. The country’s fiscal losses from illicit alcohol amounted to US$438 million in 2016. The country likewise lost P26.87 billion in tax revenues due to fuel smuggling or misdeclaration in 2016. In 2021, excise tax collections of the BIR amounted to P317.69 billion which is 15.23 percent of the total revenue collections of the agency. Of this, P90.1 billion came from excisable alcohol products, P176/4 billion came from tobacco products, P7.3 billion from petroleum products, P35.8 billion from miscellaneous products, and P7.8 million from mineral products.