FOREIGN WORKERS Government agents hold a group of Chinese found working in the underground cigarette factory in Nueva Ecija. —PHOTO COURTESY OF DEPARTMENT OF FINANCE
GAPAN, Nueva Ecija—As the government intensified its campaign against illicit cigarette trade, a team from the Bureau of Customs (BOC) over the weekend swooped down on a warehouse here and seized P200 million worth of fake cigarettes.
Seventeen Chinese were arrested as the team from the BOC’s enforcement and security service seized the warehouse on Valmonte Street at Barangay Pambuan here, including raw materials and machines used in making cigarettes as well as fake cigarettes.
The compound, where the warehouse is located, is registered to a businessman, identified as Chito Baraza, who is not from the city.
Under surveillance
The factory had been under surveillance for three months after the BOC received a tip from an informant, Customs Commissioner Isidro Lapeña said, adding that they had also information on the financier of the illegal operation.
The police took into custody Huang Hui, Xu Xing Yi, Chen Zhi Jian, Wu Shao Jin, Huang Shun, Cai Yi Ming, Cheng Quian Tao, Luo Shan You, Yi Fa Ming, Chen Fu Hua, Xie Han, He Xiao Bo, Zheng Man Hu, Luo Han Ping, Quiao Dong, Chen Chong and Du Zhen Xin.
They are facing charges for violating the intellectual property law (Republic Act No. 8293).
Lapeña said the machines found at the factory could produce 400 master boxes of cigarettes a day.
During an inspection of the warehouse on Monday, Lapeña said fake cigarettes were proliferating because these were sold cheaper than popular cigarette brands, which now pay high taxes.
But he did not attribute this trend to the Tax Reform for Acceleration and Inclusion (TRAIN) Act (Republic Act No. 10963), which imposed new excise taxes on cigarettes, sugary beverages, oil products and vehicles.
Profit
“Why do many venture into this type of business? For profit. Each cigarette tax stamp alone costs P33,” Lapeña told reporters.
WAREHOUSE RAID Equipment used in manufacturing fake cigarettes were found by customs agents in a warehouse in Gapan town, Nueva Ecija province, that they raided on Saturday. PHOTO COURTESY OF DEPARTMENT OF FINANCE
Earlier, Finance Secretary Carlos Dominguez III ordered the Bureau of International Revenue and the BOC, the country’s two biggest tax-collection agencies, to investigate the alleged smuggling of cigarette-making machines to get to the bottom of the reportedly rising number of fake cigarettes being sold in the market.
During a recent meeting, Dominguez told Lapeña and Revenue Commissioner Caesar Dulay “to trace the manufacturer of the machines and travel to the probable country or countries of origin to seek the cooperation of customs authorities there in finding the people behind the illegal entry of the cigarette-making units via Philippine ports.”
“Look for the manufacturers, then file complaints before the concerned embassies there,” Dominguez had told Lapeña and Dulay.
High taxes
Officials said fake cigarettes were proliferating as a result of the higher excise taxes slapped on “sin” products, which also increased retail prices.
The unitary cigarette excise tax further rose to P35 per pack starting July under the TRAIN law.
In January, the unitary excise tax slapped on cigarettes rose to P32.50 per pack from P30 a pack last year.
On top of further raising the excise taxes on tobacco and alcohol products, the Department of Finance (DOF) was also eyeing to stop the sale of cigarettes per stick as well as the use of e-cigarettes under its proposed tax reform package “2 Plus.”
Under the proposed amendments to the tobacco excise tax regime folded into the package, the DOF wanted to “prohibit the importation and sale of e-cigarettes.”
The DOF also wanted to ban the sale of loose, or “per stick,” cigarettes while at the same time including a provision on plain packaging.