Philippines: Solon Seeks Congressional Probe on Cigarette Smuggling in PHL

Source from:  GMANews.TV 11/13/2014

A lawmaker has asked Congress to investigate the illicit trade of cigarettes in the country, which cost the government close to P16 billion in uncollected taxes last year.

In an effort to plug revenue loss, AAMBIS-Owa party-list Rep. Sharon Garin has filed House Resolution 1542 – calling on the House Ways and Means committee to probe into the smuggling of tobacco products.

"The government could generate more income if the tobacco smuggling will be curbed, [T]hat is why Congress should use its oversight function to check if amendments to Sin Tax Reform Law is in order or if the BIR is doing all the right moves to ensure that revenues are not lost," Garin, vice-chairperson of the Committee on Ways and Means said.

A report released by the Oxford Economics and International Tax and Investment Center (ITIC) showed a sixfold surge in uncollected sin tax – or the excise tax on tobacco and alcohol products – to P15.6 billion last year from P2.6 billion in 2012.

The study commissioned by Philip Morris Inc. revealed a threefold increase in consumption of illicit tobacco products to 19.1 billion in 2013 from P6.4 billion in 2012.

Bureau of Internal Revenue chief Kim Henares noted the sin tax collection in 2013 exceeded the BIR target by nearly P1 billion, with the government raking in P33.96 billion in additional revenues during the first year of implementation of the Sin Tax Reform Law.

In January to June 2014, the sin tax collection stood at P45.99 billion, of which P11.34 billion were from tobacco products.

Congressional obligation

The BIR has recently implemented the Internal Revenue Stamp Integrated System (IRSIS) required under the Sin Tax Law to further shore up its sin tax collection and curb smuggling of tobacco products. Under IRSIS, internal revenue stamps with several security features must be affixed on all imported and locally-manufactured cigarette packs.

Higher excise taxes were imposed on tobacco and alcohol products starting January 1, 2013 following the enactment of Republic Act 10351 or the Sin Tax Reform Law in December 2012. The legislation was aimed at curbing cigarette smoking and alcohol consumption among Filipinos while helping tobacco farmers and raising government revenues.

Based on National Tobacco Administration data, around 1.9 million Filipinos are employed by the tobacco industry, 43,960 of which are tobacco farmers.

The 2009 Global Adult Tobacco Survey conducted by the World Health Organization showed 28 percent or 17.3 million Filipino adults 15 years and older are smokers.

Garin said an investigation into illicit trade in cigarettes is imperative to protect the well-being of both the public and tobacco farmers.

"It is an obligation of the Philippine Congress to formulate measures to eliminate tobacco smuggling in order to protect the health of all Filipinos and the interest of tobacco farmers as established by the Sin Tax Law," she said. Enditem