P15.6-B revenues lost to cigarette smuggling – lawmaker

MANILA, Philippines - A party-list representative has asked the House ways and means committee to look into the reported unabated smuggling of cigarettes into the country, which she said has resulted in a P15.6-billion revenue loss.

In Resolution 1542, Rep. Sharon Garin of AAMBIS-OWA said the committee should recommend remedial legislation to plug loopholes in the law to lessen and eventually eliminate smuggling.

Garin said she is alarmed by the recent report of two research entities, Oxford Economics and International Tax and Investment Center, that 19.1 billion smuggled cigarettes were consumed in the country in 2013.

Quoting the report, she said if taxes were collected on such huge quantity of cigarettes, they would have amounted to P15.6 billion. She said it is imperative for lawmakers to look into the report and approve remedial measures.

“The government could generate more income if tobacco smuggling will be curbed. That is why Congress should use its oversight function to check if amendments to the Sin Tax Reform Law are in order or if the BIR (Bureau of Internal Revenue) is doing all the right moves to ensure that revenues are not lost,” she stressed.

Garin’s colleague Eleandro Jesus Madrona of Romblon earlier filed a bill that also seeks to curb cigarette smuggling.

Madrona’s House Bill 5013 seeks to fix a uniform minimum cigarette price of P38 per pack starting on Jan. 1, 2015. The floor price would exclude the excise tax and the 12-percent value added tax (VAT).

If the measure were enacted, the minimum price for cigarettes would be computed at P38, plus an excise tax of P21 and VAT. The price could come up to more than P60 per pack.

Under Madrona’s proposal, the floor price would increase to P44 beginning on Jan. 1, 2016 and to P51 on Jan. 1, 2017.

Starting in 2018, the floor price would be adjusted every year by four percent.

Madrona said his proposal would discourage smugglers and unscrupulous traders from dumping cheap cigarettes in the country.

It also has a health dimension, he said, since it likewise aims to deter the youth from smoking by denying them access to affordable cigarettes.

“Any cigarette trader who sells products at cheap prices by avoiding paying tax is doing so against the laws of the country and is simply producing and selling products to lure smokers, including the youth,” he said.

He lamented that dumping and smuggling have not stopped despite the increase in excise taxes on tobacco products as contained in the sin tax law that Congress enacted two years ago.

The tax increase has not discouraged Filipino smokers, whose number has remained at about 20 million, he said.

He said a recent survey showed that 45 percent of smokers merely switched to cheaper brands when the higher taxes took effect.