Illicit cigarette trade pushed smoking prevalence in the Philippines from 14.6 percent in 2021 to 18.9 percent in 2023, based on data.
“This is a cause of concern that has triggered this hearing. We saw a reversal [in smoking prevalence] after 2021. For six years, we reduced smoking prevalence. But in two years, we’re back to square one,” Senator Win Gatchalian said in a recent hearing by the Senate committee on ways and means which he chairs.
Gatchalian said during the hearing that despite the increase in the smoking rate, the government’s excise tax revenue collection fell during the period as illicit trade thrived.
He said tobacco excise tax revenue slid from P176.49 billion in 2021 to P134.91 billion in 2023, which could be attributed to smuggling.
He cited data from Kantar and Euromonitor, which revealed that illicit cigarettes accounted for 16% of cigarettes sold in the Philippines.
“Illicit trade will not do us any good. Illicit traders do not pay taxes to the government. At the same time, it also promotes smoking to our constituents. Those illicit cigarettes are accessible to anyone, and any age,” Gatchalian said.
Gatchalian said that based on the report of the Food and Nutrition Research Institute (FNRI), the country’s smoking prevalence increased between 2021 and 2023.
He noted the consistency of the FNRI, Kantar and Euromonitor data on illicit trade. He said the highest prevalence was recorded in Southern Mindanao.
The senator urged government agencies to step up enforcement efforts and pursue the conviction of those involved in the illegal tobacco trade.
The Bureau of Customs and the Bureau of Internal Revenue reported that they filed 93 cases against perpetrators since 2017, but only one case resulted in a conviction.
“If no one is jailed, no one is afraid. If no one is afraid, the [illicit trade] will continue. And the profit margin can be as high as three times or even four times. So the conviction is very important,” Gatchalian said.
“We can hold hearings here every day, but if we don’t put people in jail, nothing will really happen,” Gatchalian said.
He also addressed representatives from Lazada and Shopee during the committee probe where he highlighted the illicit trade of tobacco and vape products on online platforms.
“What are you doing to prevent this from happening? You have to give us a better solution in order to prevent this type of product from being sold on your platforms,” Gatchalian said.
“Online platforms should do a much better job at filtering these illicit products,” he said, stressing that these platforms are the first line of defense against illicit trade.
Based on data presented during an earlier Senate Ways and Means committee hearing, tax leakages from illegal cigarettes amounted to P342 million in 2024, while leakages from vapor products reached P64 million.
Philippine Tobacco Institute president Jericho Nograles said the government was losing P52 billion from the smuggling of vape and tobacco products annually.
BOC assistant commissioner Vincent Maronilla said the agency stepped up its campaign against tobacco smuggling. He said from 131 seizures in 2021 amounting to P1.71 billion, their seizures increased to P318 in 2024 with an estimated value of P9.19 billion.
The BIR said it conducted 141 enforcement activities against illegal vapor products from January to September 2024. This significantly increased to 847 from October to November of the same year because BIR also conducted visitations of retailers of vapor products.
