The Philippine House Committee on Agriculture and Food has approved legislation that aims to declare the smuggling of raw tobacco, cigarettes, cigars and heated-tobacco products as economic sabotage, reports the Manilla Bulletin.
The bill seeks to include unprocessed and processed tobacco in the Anti-Agricultural Smuggling Act’s definition of “agricultural commodities.”
“Every revenue lost from illicit tobacco trade deprives the country of much-needed funds to support various programs of the government, especially the economic program of tobacco-producing provinces as well as general appropriations for education and other social welfare programs,” said Senior Deputy Majority Leader Sandro Marcos, principal sponsor of the bill.
According to Marcos, the tobacco industry provides livelihoods to 2.2 million Filipinos, including 516,000 farmers and workers. In 2020, it accounted for around 6 percent of tax revenue and 58 percent of sin tax revenues. From April to June 2022, production of tobacco dried leaves reached 36,038 metric tons with the Ilocos Region accounting for 24,020 metric tons, or 66 percent of the total production.
Smuggling threatens not only the livelihood of tobacco farmers but also causes the government to lose out on PHP26 billion ($452.84 million) in tax collections annually, according to Marcos.
From 2019 to January 2022, the Bureau of Customs (BOC) confiscated 87,430 illicit master cases each containing 10,000 cigarettes. The Bureau of Internal Revenue (BIR) seized 46.1 million packs of cigarettes from 2018 to 2021 and 47 million counterfeit tobacco excise tax stamps from 2018 to 2022.
The BOC estimated that the government lost PHP3.7 billion in tobacco excise taxes from 2018 to 2021.
Former Representative Jericho Nograles said the smuggled items confiscated by authorities “are only the tip of the iceberg.” He said smuggling is also a national security issue because it involves the porosity of the country’s borders.
Under the Philippines’ current law, companies or people caught in possession of untaxed tobacco products face prison terms of up to 12 years. The proposed legislation seeks to increase the maximum prison sentence to 40 years without bail. This would be on top of paying fines double the value of the seized smuggled items plus the total amount of unpaid duties and other taxes.