Former Senate President Franklin Drilon, the author of the Sin Tax Reform Law (Republic Act 10351), expressed concern over the increasing incidence of cigarette smuggling in the Philippines.
“I see it every day in television news and newspaper reports about the arrests being made by our law enforcement agencies against people who are engaged in the business of manufacturing and selling of non-tax paid cigarettes. For me, this is very alarming,” Drilon said.
Drilon was credited with the passage of Republic Act 10351 in 2012, landmark legislation that restructured the excise taxation of alcohol and cigarettes in the Philippines. The law simplified taxation for these products while imposing higher rates to generate additional tax revenues. This earned Drilon praise from the anti-smoking community, and he was awarded the Medal of Honor by the World Health Organization Western Pacific Regional office in 2013.
“In 2012, I authored and fought for the passage of RA 10351 with the twin objectives of increasing government revenues and curbing smoking consumption. We immediately succeeded in achieving these revenue and public health goals because in 2013, the government was able to immediately collect 72 billion pesos in tobacco taxes compared to 33 billion pesos in 2012. At the same time, the total cigarette volume contracted by 17% for the same period,” Drilon said.
Data from the Bureau of Internal Revenue (BIR) show that excise tax revenues on cigarettes have continued to decline year on year. In 2022, revenues fell by 9 percent, followed by a steeper decline of 23 percent in 2023. Last year, excise tax revenues decreased by 26 percent, equivalent to P130 billion, lower than the P176 billion collected in 2021.
“Cigarette smuggling is a big problem for the government. Firstly, because it deprives the government of huge tax revenues, which can be used for various government projects and to fund Philhealth. Secondly, because it defeats our public health objective of bringing down smoking rates. How can we bring down smoking rates if people are still able to buy very cheap cigarettes similar to those of 2012 prices?” Drilon said.
During his term as senator, Drilon authored several anti-smoking measures, including additional increases in cigarette excise tax and the placement of graphic health warnings on cigarette packs.