A former lawmaker called for deeper cooperation between the government and the private sector to once and for all eradicate, if not significantly reduce, the consumption of illicit tobacco products in the Philippines.
Former Pwersa ng Bayang Atleta Rep. Jericho Nograles said that as smugglers become more sophisticated in their methods, government agencies should also adapt to evolving technologies.
“When the Bureau of Internal Revenue, Bureau of Customs catch these criminals, they [criminals] adapt. The government response should also adapt, not just law enforcement but also the legislature. It’s now time to do regional and international cooperation. All governments, particularly our ASEAN neighbors, should work together,” Nograles said in the recent International Tobacco Agricultural Summit at Shangri-la The Fort in Bonifacio Global City.
Government officials also cited the need for regional and international cooperation to stop illicit cigarette trade which deprives the government of about P30 billion annually.
BOC Commissioner Bienvenido Rubio said the Philippines’ porous borders are advantageous to smugglers as illicit goods do not course through regular ports, but are instead brought in through the “backdoors.”
“We try to strengthen anti-smuggling operations, but these smugglers are also innovating. The biggest challenge now is how to protect our borders since we are an archipelago. So we need to cooperate with other agencies,” Rubio said.
The BOC reported during the summit that in the first half of 2023, it confiscated P30.5 billion worth of smuggled goods across various operations in continued partnerships with national, regional and international law enforcement agencies. The estimated value was the highest in the last five years.
Nograles said to make significant in-roads against the vast global network of illicit tobacco traders, governments around the world should closely collaborate.
“In the ASEAN region, criminals are taking advantage of porous borders and lax regulations by illegally trafficking cigarettes across borders of neighboring countries. In addition to regional law enforcement cooperation, governments should also consider fortifying their domestic legislation by ensuring that smugglers will be prosecuted, and severe penalties shall be meted out on those convicted,” he said.
“In this case, governments can assess whether the provisions of the Protocol to Eliminate Illicit Trade in Tobacco Products can apply and improve their domestic laws,” he said. The Protocol is an international treaty under the World Health Organization’s Framework Convention on Tobacco Control that provides a global model designed to combat worldwide illicit tobacco trade.
BIR Commissioner Romeo Lumagui wanted higher public awareness on illicit trade, as a lot of establishments the agency raided in recent months claimed they didn’t know they were carrying illicit products.
“That’s why [the BIR] is aggressive in our activities. We want to let them know that when they sell these untaxed products, we will be confiscating them, and we will go after [sellers of illicit products],” he said.
Rubio said that as most illicit cigarettes are sourced outside the Philippines, international partners should enforce data and intelligence-sharing which would allow the BOC to put sources and suppliers of illicit goods into the system, facilitate tracking from high-risk countries and trigger an alarm for certain cargoes to be scrutinized.
Nograles said both the BIR and BOC are already leveraging evolving technologies to address technical smuggling, where smugglers import goods into the country through fraudulent methods like misdeclaration, misclassification or undervaluation.
“For Customs, there’s a directive for pre-shipment, which means exporting and importing documents will be compared to reduce technical smuggling. For the BIR, they’re already streamlining everything to avoid inefficiencies. Given that, it’s domestic smuggling that must be looked into,” he said.
Data from the National Tobacco Administration show that revenue losses from tobacco smuggling reach about P30 billion annually.
Lumagui said the tobacco industry contributes an average of P147 billion annually in excise tax payments, representing at least 50 percent of total annual excise tax revenues.
Tobacco smuggling also heavily impacts farmers as low illicit cigarette prices lessen the demand for locally grown tobacco, resulting in lower income and decreased productivity.
Nograles said the illegal trade of tobacco products is not only detrimental to the government’s revenue collections. “The illicit tobacco trade harms the main source of livelihood for the more than two million Filipino farmers and workers in this sector,” he said.
“Illicit trade gives rise to unfair competition between illegal merchants and legitimate business enterprises, a situation that in the end is harmful to the local workforce,” said Lumagui.
“It is given that the agricultural sector has the potential to generate more revenues for the country in an even playing field, and we are one with the Government’s aspiration and effort to continuously provide Filipino farmers the opportunity to be more productive and globally competitive. A deeper and more complex understanding of the situation of our tobacco farmers could help inform policies and other related efforts to help and support them,” said Rubio.