Senator Sherwin Gatchalian
Senator Win Gatchalian raised the proverbial alarm over the rising smoking prevalence in the country and the worsening illicit tobacco trade amid the rapid decline in excise tax revenue collection.
“This is a cause of concern that has triggered this hearing. We saw a reversal (in smoking prevalence) after 2021. For 6 years, we reduced smoking prevalence. But in 2 years were back to square one,” Gatchalian said.
As the smoking prevalence increased, Gatchalian noted the decline in excise tax revenue from tobacco, falling from P176.49 billion in 2021 to P134.91 billion in 2023. He also referenced data from Kantar and Euromonitor, which revealed that illicit cigarettes account for 16 percent of cigarettes sold in the Philippines.
“Illicit trade will not do us any good. Illicit traders do not pay taxes to government. At the same time it also promotes smoking to our constituents. Those illicit cigarettes are accessible to anyone, and any age,” he said.
Citing FNRI data, Gatchalian reported that smoking prevalence has increased from 14.6 percent in 2021 to 18.9 percent in 2023.
Gatchalian noted the consistency with the FNRI Kantar and Euromonitor data on illicit trade, noting that the trend is there with the highest prevalence in Southern Mindanao.
He urged government agencies to step up enforcement efforts and pursue conviction of those involved in illegal tobacco trade.
According to the Bureau of Customs and the Bureau of Internal Revenue, a total of 93 cases has been filed against perpetrators since 2017, but only 1 case has resulted in a conviction.
“Kung walang nakukulong, walang natatakot. Kung walang natatakot, tuloy tuloy lang ang ligaya. And the profit margin can be as high as three times or even four times. So the conviction is very important,” Gatchalian said.
“Pwede tayong mag hearing dito araw-araw pero if we don’t put people in jail walang mangyayari talaga,” Gatchalian said.
He also addressed representatives from Lazada and Shopee during the committee probe where he highlighted the illicit trade of tobacco and vape products on online platforms.
“What are you doing to prevent this from happening? You have to give us a better solution in order to prevent this type of product from being sold on your platforms,” Gatchalian said.
“Online platforms should do a much better job at filtering these illicit products,” he noted, stressing that these platforms are the first line of defense against illicit trade.
Based on data mentioned by Gatchalian during an earlier Ways and Means committee hearing, tax leakages from illegal cigarettes amounted to P342 million in 2024, while leakages from vapor products amounted to P64 million.
According to Philippine Tobacco Institute (PTI) President Jericho Nograles, the government is losing P52 billion from the smuggling of vape and tobacco products.
Earlier, BOC Assistant Commissioner Vincent Maronilla said from 131 seizures in 2021 amounting to P1.71 billion, their seizures increased to 318 in 2024 with estimated value of P9.19 billion.
The BIR, for its part, has conducted 141 enforcement activities against illegal vapor products from January to September 2024. This significantly increased to 847 from October to November of the same year because BIR also conducted visitation of retailers of vapor products.