Smuggling proliferating

Cigarette smuggling is on the rise in the Philippines partly due to tax-driven higher retail prices, according to a story in The Philippine Daily Inquirer.
Internal Revenue Commissioner Caesar R. Dulay said yesterday that the country was suffering a “proliferation of smuggling”.
He said the situation had been brought to the attention of the Bureau of Internal Revenue (BIR) by Philip Morris and Japan Tobacco, which had investigated the trade. And the BIR had responded by putting in place a task force charged with addressing the situation.
Although he did not provide figures on the volume of illicit cigarettes entering the country, the BIR chief said it was substantial, “because the tobacco companies were complaining”.
Dulay said it was likely that most of the smuggled cigarettes came from neighboring Asian countries.
“We also have feedback that there are some manufacturers in the provinces producing fake cigarettes; in fact, the NBI [National Bureau of Investigation] and the police have conducted some raids,” Dulay said, citing manufacturing units recently uncovered in Bulacan and Nueva Ecija.
Dulay admitted that smuggling had become rampant after the government raised the excise tax under the Tax Reform for Acceleration and Inclusion (TRAIN) Act. Under the TRAIN Law, cigarette taxes rose to P32.50 per pack effective January 1, from P30.00 a pack last year, and are due to be increased in stages to P40.00 per pack by the end of 2023.
Dulay said that a pack of licit cigarettes retailed at P60-65 per pack, while non-tax-paid products sold for half that price. Given this, it was likely that smokers would buy the illicit cigarettes.