The Department of Agriculture (DA) is committed to address the proliferation of illicit trade in the local tobacco industry, noting its severe impact on government revenues and the livelihood of farmers.
The DA issued this declaration in a speech by Agriculture Secretary Francisco Tiu Laurel, delivered by Undersecretary Roger Navarro, during the Second International Tobacco Summit on Monday, Jan. 27.
“Protecting and supporting our local tobacco industry is crucial for the livelihoods it sustains in the countryside and the economic stability it provides,” said Laurel.
“We cannot afford to let the illicit trade undermine our government sectors and the livelihood of our farmers,” he added.
The Bureau of Internal Revenue (BIR) earlier confirmed that the government is losing up to P100 billion in excise tax collections annually due to illicit trade. Excisable products include alcohol, petroleum, and tobacco, among others.
While he admitted that combating illegal tobacco trade will have “significant hurdles,” Laurel emphasized that a collaboration among policymakers, regulators, and law enforcement is especially vital.
The DA chief said this is viable under Republic Act (RA) No. 12022 or the Anti-Agricultural Economic Sabotage Act, which President Ferdinand “Bongbong” Marcos Jr. enacted in September of last year.
“It is imperative for our government to adopt a holistic approach to approach this issue. We urge all stakeholders, public and private sector, to unite in our efforts and to further strengthen our strategies against illicit tobacco trade while supporting and empowering our local farmers,” he explained.
Under the law, illicit operations in agricultural and fishery products such as smuggling, hoarding, profiteering, and cartel operations will now be classified as economic sabotage—a non-bailable offense punishable by life imprisonment.
Laurel said clamping down on illicit trade enables the government to maximize its revenues, particularly those allotted for social service programs.
To recall, excise taxes in the country provide essential funding for key initiatives of the government such as the Universal Health Care (UHC) program.
The agriculture secretary, however, pointed out the Philippines imposes some of the highest excise taxes on tobacco products in the world.
“While excise taxes are designed to protect public health and generate government revenues, they may have inadvertently contributed to the growth of illicit trade which undermines the legitimate tobacco industry and the welfare of our farmers,” he continued.
Several economists have suggested that higher excise tax forces consumers to favor non-taxed tobacco products which are relatively cheaper.
According to the National Tobacco Administration (NTA), illicit trade of tobacco affects approximately 2.2 million Filipinos who are financially dependent on the crop. This includes more than 430,000 farmers, farm workers, and their family members.
The NTA is the organizer of Monday’s event held in Quezon City, featuring policymakers, industry leaders, and government officials.
The agency launched the inaugural summit in 2023 to emphasize the discussion on the campaign against the proliferation of illicit tobacco trade and smuggling.
This year’s event, with the theme “Advancing the Local Tobacco Industry and Combatting Illicit Trade,” was originally scheduled in October 2024 but was postponed due to inclement weather.