BIR Chief Venus Gaticales during an interview with reporters in Makati City (Dexter Barro II/MANILA BULLETIN)

A Bureau of Internal Revenue (BIR) official commended on Tuesday, May 28, Albay 2nd district Rep. Joey Salceda over his proposed legislation that aims to impose heavy penalties against perpetrators of smuggling and other forms of illicit tobacco trade.

During a chance interview with reporters in Makati City, BIR Chief Venus Gaticales said Salceda’s House Bill (HB) No. 10329 will help address the national government’s shortfalls in regulating the proliferation of illicit tobacco.

“Of course, any law that will help us give stricter regulations or regulatory powers will help because our workforce is not that big enough to cover the entire Philippines,” said Gaticales.

Under Salceda’s measure, also known as the proposed Anti-Illicit Tobacco Trade Act, a tracing system shall be established for the entire value chain of tobacco to combat tax evasion.

Companies will also be required to register any machinery, components, or ingredients specifically used for tobacco manufacturing with the BIR prior to their use.

Gaticales says that while the BIR is yet to have a final position on HB No. 10329, she is hoping that this measure will also enable the agency to have tighter border control against illegal trade.

“The Philippines is an archipelagic country, [with] so many open borders. So I think border control should be tightened by the government and also tax—efficient tax administration. Because as far as the BIR is concerned, we have lesser workforce and we are not in charge of manning the borders,” she said.

“We will be only conducting enforcement activities when all of that are inland or within the Philippines already. So there are a lot also of the kinds of illicit trade,” she added.

According to Gaticales, illicit trade has “greatly affected” the collection of excise tax on tobacco products. She said the collection for 2023 severely decreased by about P25.5 billion or 15.91 percent.

“The collection of excise tax in general, not only for the tobacco, comprises about 12 percent of the entire government collection. And tobacco, of all excisable products, comprises or contributes at least 50 percent of the total excise tax collection,” the BIR official explained.

From this so-called sin tax from tobacco products, she said it also primarily bankrolls the funding for the Universal Health Care Act.

“Whatever the decrease of the collection as far as the tobacco excise tax is concerned, our health care would be affected,” said Gaticales.

“Our support for the tobacco farmers' livelihoods is greatly affected and also for the country because it will also be a decrease as far as supporting the social welfare is concerned,” she stressed.