STAKEHOLDERS in the cigarette industry want illicit cigarette traders prosecuted and penalized more harshly amid the rising number of cases of illicit cigarette trade in the country.
A study by the University of Asia and the Pacific (UA&P) showed that as the price of cigarettes increased due to higher taxes, illegal trade also rose.
Since the Sin Tax and TRAIN Law became effective, illicit cigarette trade has gone up to 17 percent from 6 percent in 2007, it said.
UA&P industry economist Alyssamar Nuñez pointed out the correlation of higher cigarette prices to the proliferation of illegal trade.
“High taxation, unfortunately, has an unintended consequence. It encourages the rise of illicit trade. Without effective regulatory enforcement in reducing or completely eliminating illicit cigarette trade, all efforts in enforcing a level playing field, lowering smoking prevalence and raising tax revenues will all go down the drain,” Nuñez said.
The study also noted that the government has lost P26 billion worth of excise tax due to illicit cigarette trade from 2013 to 2022.
Production losses also led to a lower gross domestic product (GDP) contribution by an average of 0.39 percent as employment in the tobacco industry dropped by 4.9 percent.
Nuñez warned against imposing more taxes on cigarettes since such efforts could be counterproductive if it will only fuel illicit trade.
“Our main enemy here is the smugglers. Higher taxes contribute to higher prices that’s why illicit traders are encouraged to sell it. It does not only hurt the industry itself but also the consumers,” Nuñez said.
Philippine Coalition of Consumer Welfare Inc. chairman Ric Samaniego said that consumers tend to patronize smuggled cigarettes that are 60 percent cheaper than cigarettes sold in formal markets.
“Lahat naman tayo naghahanap ng mura. Same is true with cigarettes,” Samaniego said.
He added that the government should focus on strict enforcement and ensure strict penalties will be imposed on cigarette smugglers.
“Dapat stiffer penalty. Ang hinahanap talaga natin, ‘yong masampolan,” Samaniego said.
For the Federation of Philippine Industries Chairman Dr. Jesus Arranza, smuggling should be a non-bailable offense.
“The government should look into prosecution. Kung lahat ‘yan walang piyansa, magtitino ‘yan,” Arranza said.
Stakeholders also recommended that additional funds from excise tax collections be allocated for maritime patrolling dedicated to intercepting smuggled cigarettes from entering the country. (ABS-CBN News)
