BIR: P60 billion taxes lost to illicit tobacco trade

MANILA, Philippines — As much as P60 billion in taxes have been lost this year due to illicit tobacco trade, a top official of the Bureau of Internal Revenue (BIR) said at a recent forum hosted by the National Tobacco Association.

“Illicit trade provides an uneven playing field for legitimate businesses and creates an unfair advantage which leads to the decline of the tobacco business,” said BIR commissioner Romeo Lumagui Jr. during The Anti-Illicit Trade Interagency Dialogue: Protecting National Economic Interests through Greater Synergy and Cooperation, held earlier this month in Makati City.

He pointed out that illicit traders have been using advanced technology in their activities which makes them difficult to track. They also pose health risks to the public as these tobacco products contain harmful substances.

BIR Operations Group deputy commissioner Maridur Rosario, meanwhile, said strengthening the incentives system for tipsters and whistleblowers would help in the fight against illicit tobacco trade.

“Collection of taxes is not just for BIR. It is for everyone,” she said.

Last year, the BIR reported a decrease of P16.1 billion in excise tax collection from the tobacco industry, compared to the P176.5 billion collection in 2021. Lumagui expects a further decline to anywhere between 11 percent and 20 percent this year.

Customs deputy commissioner Teddy Sandy Raval, speaking at the same event, acknowledged that the threat of smuggling had been increasing, with some 190,000 master cases – which would have cost the government P5.5 billion in losses if they had made their way into the market – being confiscated.

Philippine National Police deputy chief for operations Lt. Gen.Michael John Dubria also expounded on the impact of illicit trade not only on the economy, but on criminality and national security.

He said despite the operational constraints of Republic Act 10863 or An Act Modernizing the Customs and Tariff Administration, where the BOC needs to deputize the PNP to implement anti-smuggling measures, the PNP has made progress against cigarette and tobacco smuggling, conducting 55,951 operations in just over three months from July to early October this year, resulting in the arrest of 262 individuals.

Meanwhile, acting Coast Guard Intelligence Force Commodore Allen Dalangin said they were looking at Southern Mindanao which accounted for 34.22 percent of reports on cigarette smuggling.

Lawyer Rhona Vergara of the Vergara Mamañgun Jamero Law Offices emphasized the need to move forward to prosecution and actual administration of justice in cases of tobacco smuggling. “One of the reasons is conflicting regulations,” she said. “There are so many loopholes that facilitate the illegal trade of tobacco using transshipment as an excuse.”