Finance Secretary Ralph G. Recto and Senate Finance Committee Chairman Sherwin Gatchalian sounded the alarm over the growing threat of illicit trade in the country, calling for a calibrated tax policy and stronger prosecution to curb smuggling and revenue losses.
During a Senate Finance Committee hearing on e-commerce and illicit trade, Gatchalian said the low number of convictions despite thousands of filed cases has emboldened offenders to continue their illegal activities.
“Many are attempting to bring in illicit products, since they know they are unlikely to be convicted. Their products may be confiscated, but we all know that the prices of legitimate products compared to illicit trade are almost four to five times higher,” he explained.
The lawmaker stressed that the lack of accountability allows smugglers to treat arrests and seizures as mere business risks rather than serious consequences.
“If the cost is only ₱20, they’re selling it at ₱100, ₱140. So, even if a shipment is caught, as long as the perpetrator does not go to jail, the illegal operations continue,” he added.
He urged the Department of Finance and the Department of Justice to collaborate on building stronger cases and ensuring that offenders face prosecution.
Without convictions, Gatchalian says enforcement actions and seizures will have little long-term impact.
Finance Secretary Ralph Recto echoed Gatchalian’s call for balance but warned that excessively high excise taxes could unintentionally push consumers toward illicit markets.
Recto said tax policy should be carefully calibrated to maintain compliance while discouraging smuggling.
He cited tobacco as a key example, noting that steep tax rates can widen the price gap between legal and illegal products, making smuggling more attractive.
For his part, Bureau of Customs Commissioner Ariel Nepomuceno reported that the agency confiscated ₱34.73 billion worth of smuggled goods from July to August 2025.
The seized items included ₱4.6 billion in illegal drugs, ₱2.1 billion in illicit cigarettes, tobacco, and vape products, along with counterfeit items amounting to P1.4 billion
Nepomuceno said the agency is pursuing full digitalization to reduce corruption and improve transparency.
Meanwhile, Bureau of Internal Revenue Commissioner Romeo Lumagui Jr. said tobacco excise tax collections rose 30.4 percent to ₱25.6 billion, with 1,105 seizures and ₱1.8 billion in tax assessments in 2024.
He added that a digital track-and-trace system for tobacco and vape products will be rolled out next year to strengthen monitoring.
