Senate resolution seeks to curb smuggling of excisable products

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The Bureau of Customs on March 2 inspected a warehouse where they found 18,533 master cases of assorted imported cigarettes valued at P1.4 billion. Photo from BOC.
  • A resolution has been filed in the Philippine Senate seeking to address an upsurge in illegal trade of excisable products to plug revenue leakages and protect consumer health
  • Senate Resolution No. 566 seeks to assess the scale of illicit trade in the country, adjust enforcement agencies’ priorities and border restrictions, and introduce remedial legislation to curb the smuggling of excisable products
  • Resolution author Senator Sherwin Gatchalian says the government is losing excise revenues amid increasing smuggling of alcohol, tobacco, cigarette and vapor products, petroleum, cars, and non-essential goods and services, among other products
  • Government lost P1.4 billion in March due to smuggling of various brands of cigarettes in Sulu

A resolution seeking to address the rise in smuggling of excisable products has been filed at the Philippine Senate.

Senate Resolution No. 566, filed by Senator Sherwin Gatchalian, seeks to assess the scale of illicit trade in the country, adjust enforcement agencies’ priorities and border restrictions, and introduce remedial legislation needed to plug revenue leakages due to smuggling of excisable goods.

The government imposes excise tax on alcohol, tobacco, cigarette and vapor, as well as petroleum products, automobiles, non-essential goods and services, sweetened beverages, and mineral products.

“Smuggling of these products is fast becoming rampant and deprives the government of much-needed revenues necessary to finance various programs and projects and sustain economic growth and development,” Gatchalian said in a statement.

“The rising incidence of illicit trade on excisable products also poses a great risk to the health of consumers when substandard products are manufactured using dangerous and unapproved ingredients,” the senator added.

Gatchalian noted the government incurred revenue losses totalling P1.4 billion in March due to smuggling of various brands of cigarettes in Sulu. Also last month, the Bureau of Customs Port of Cagayan de Oro foiled an attempt to smuggle two containers of cigarettes valued at P160 million.

RELATED READ: BOC confiscates P1.4B smuggled cigarettes in Sulu

In February, authorities seized P600,000 worth of undocumented cigarettes in Dipolog City, Zamboanga del Norte, and some P2 million worth of suspected smuggled cigarettes in Cauayan, Negros Occidental.

Gatchalian said as much as 42.8% of total cigarette consumption in the country from 2009-2017 came from illicitly traded tobacco products, according to a study entitled “Measuring Illicit Cigarette Trade: The Case of the Philippines” published in 2021.

The country’s fiscal losses from illicit alcohol totalled US$438 million in 2016. The country likewise lost P26.87 billion in tax revenues due to fuel smuggling or misdeclaration in 2016.

In 2021, excise tax collections of the Bureau of Internal Revenue reached P317.69 billion, or 15.23% of the agency’s total revenue collections of the agency. Of this, P90.13 billion came from excisable alcohol products, P176.49 billion from tobacco products, P7.37 billion from petroleum products, P35.83 billion from miscellaneous products, and P7.87 billion from mineral products.

In its accomplishment report for 2022, BOC said it had collected P203.53 billion of excise tax, 24% of its total collection of P862.93 billion.