“Black market syndicates will hurt the viability of all legitimate businesses, big and especially the small enterprises, and their millions of dependents”
Illicit trade is the manufacture, importation, distribution and sale of goods that violate trademarks, intellectual property rights, and evade taxes.
This has been a persistent problem that seriously affects the economy and poses risks to the environment and public health.
Most affected is the agricultural sector, particularly tobacco, rice, meat, and let’s not forget the onion industry.
Illicit trade is a serious problem that every administration has tried to solve but only managed to make occasional seizures and peon arrests while the deeply embedded smuggling networks remain operational.
The Anti-Agricultural Smuggling Act of 2016 classifies large-scale agricultural smuggling as economic sabotage and imposes harsh penalties for offenders.
However, enforcing this law remains a challenge due to the lack of coordination among government agencies, the presence of corruption and collusion, and the difficulty of tracking and monitoring illicit trade activities.
To give you an idea of how big and how damaging smuggling operations are, the Bureau of Customs reported seizures valued at over P 23.8 billion during the first quarter of this year.
Among the top products are counterfeit agricultural goods, tobacco, general merchandise, and illegal drugs.
Almost anything that can be manufactured in a factory or a sweat shop is at risk from counterfeiters and illegal traders.
The counterfeiters and smugglers have a well-entrenched system of transporting, concealing, and distributing contraband to be distributed to consumers looking for cheaper options in the black market. Illicit traders have infiltrated social media and e-commerce platforms as online outlets for counterfeit products.
Whenever the government imposes high taxes on certain products, they become easy targets for illicit trade.
If you are a smoker or if you indulge in alcoholic beverages, you know how the “sin” taxes have greatly increased the price of tobacco products and alcoholic beverages.
This creates the perfect scenario for smugglers and their distribution networks to exploit a big market of low income tobacco and alcohol consumers who cannot afford the highly taxed retail prices.
In compliance with Republic Act 11346 or the Tobacco Tax Law of 2019 the excise on cigarettes is now P55 per pack, a P5 increase from last year.
Next year this will increase to P60 per pack.
Notably, the taxes contributed by the tobacco industry accounted for about half of the country’s total annual excise tax revenues which translates to approximately P147 billion a year.
However, the illicit side of the tobacco trade continues to steal billions from this revenue potential.
In a statement during a recent forum organized by the National Tobacco Administration, its Regulatory Head, Mr. Robert Ambros said the yearly haul of tobacco smugglers has been estimated at a whopping P30 billion.
It would be safe to assume that the real figures are much higher due to the very clandestine nature of illicit trade syndicates.
The impact of illicit trade goes beyond lost government revenues and strikes deep into the economic and social dynamics of society.
Lost tax revenues mean there will be less resources for urgent economic recovery programs such as the massive Build Better More projects to upgrade and expand the country’s transportation infrastructure like roads, airports and seaports.
There will be less resources to implement the Universal Healthcare programs. There will be less budget allocation to operate and improve public services.
Black market syndicates will hurt the viability of all legitimate businesses, big and especially the small enterprises, and their millions of dependents.
Whenever a consumer buys contraband products on the streets or online, the money exchanged is lost to illicit traders.
They are known to be connected to organized crime syndicates whose operations are linked with more illegal and nefarious activities such as drug and human trafficking.
Smugglers and their illicit trade syndicates do not worry about any regulatory compliance to protect the welfare of their customers.
They don’t care about the quality or safety of the contraband they sell because it would be impossible for a victimized consumer to run after them, more so to prosecute them for any harm that might befall the use or consumption of their fake products.
The recent spikes in rice and onion prices that struck hard on the already inflation-weary consumers from price manipulation of the criminal alliance of smugglers and hoarders are causing concern.
No less than the President has stated in his last SONA that “ we will run after them and we will file charges against them,” and even emphatically warned in Filipino that the days of smugglers and hoarders are “numbered.”
I certainly hope President Marcos Jr. will be successful in his crack down against illicit trade.
When he does, this will be the first President to win against an evil and notoriously resilient Enemy of the State.
