CIGARETTE manufacturer JTI Philippines (JTIP) expressed its support for the passage of a law that will also make it illegal to smuggle tobacco productions nationwide.
Under the proposed law or House Bill (HB) 3917, cigarette smuggling will be equated with economic sabotage and will be slapped with stiffer penalties, including making the illicit trade non-bailable.
HB 3917 seeks to amend Republic Act (RA) 10845 known as the Anti-Agricultural Smuggling Act of 2016. The bill is being amended to include manufactured and unmanufactured tobacco, including cigars and cigarettes as well as heated tobacco products.
“We view this as a necessary step to make this crime an act of economic sabotage because simply it robs the nation’s coffers, which is still reeling from a long-drawn out pandemic,” JTIP General Manager John Freda said.
“Not only does it deprive the government of much needed tax revenue at this time, but illegal trade cheats everyone: society, consumers and legitimate businesses,” said Freda.
Under the proposed bill, cigarette smugglers will also face a minimum of 30 years imprisonment but not exceeding 40 years with no bail recommended.
At the same time, violators are obliged to settle a fine double the value of the seized smuggled items, plus the total amount of unpaid duties and other taxes.
The measure has hurdled the first reading approval in the House of Representatives and was referred to the House agriculture committee.
“JTI Philippines has previously called for stiffer sanctions against cigarette smuggling, which has become more rampant even at the height of the Covid-19 pandemic and despite intensified action on the part of law enforcement,” Freda said.
He said cigarette smuggling affects the agriculture sector, tobacco farmers, farmworkers, retailers, consumers, tobacco-growing LGUs and law enforcement units down to the revenue collection agencies.
He added that proceeds from illegal tobacco sales often finance larger criminal activities such as corruption, smuggling of drugs and weapons, human trafficking and terrorism.
In the explanatory note of HB 3917, it was estimated that 6 in 10 cigarettes sold in the country are from illegal sources. In the tobacco capital of the country, Ilocos, around 10 percent of cigarettes are counterfeits.
This has cost the government anywhere from P30 billion to P50 billion in foregone revenues annually. The bill said Euromonitor estimated that revenue losses from cigarette smuggling could reach P26.2 billion in 2022 and P31 billion in 2023.
HB 3917, citing data from the Oxford Business Group, that the tobacco industry contributed P150 billion in revenues in 2020 and excise taxes reached P149 billion in 2021.
The tobacco industry, the bill stated, accounted for P2.5 trillion or 6 percent of the excise tax contribution in 2020. Sin tax revenues comprised 58 percent or P94 billion of the total health budget, including P172 billion for universal healthcare.