International firm exec tells Senate: About 73% of tobacco products in PH smuggled
FILE PHOTO: Cigarettes are seen in this May 24, 2017 illustration photo. REUTERS/Thomas White/Illustration
MANILA, Philippines — Up to 73 percent of tobacco consumption in the Philippines is smuggled, according to an international company executive on Thursday.
Rodney Van Dooren, regional head of the Illicit trade prevention of Philip Morris International, presented the information during a Senate hearing on agricultural smuggling.
“The incidents of smuggled cigarettes have risen alarmingly, particularly in the last couple of years. And I’ll talk about specifically the areas of Luzon and Mindanao provinces, where we see a range of around 35 percent consumption to as high as 73 percent of consumption,” he said.
“To make a comparison, the global average is about 10. So even at the low end of these provinces, you’re three times higher than the global average,” he added.
Van Dooren explained that the tobacco industry generated P176 billion in excise tax in 2021. However, tax collection declined when a higher excise tax was implemented in 2022.
“In a situation like that, you would hope that there was an increased level of tax collection. Over that period of time, we actually saw a decline in taxes to the degree of nine percent, and that’s all due to the shrinkage or the contraction in the sales volume of the legal industry, and the delta went to the smuggled brands,” said Van Dooren.
Van Dooren says smuggling primarily comes from Indonesia, Vietnam, and India. While they were declared in the port of those countries, the smuggled goods were seized by Bureau of Customs officials when they arrived in the Philippines, as they are not registered under the Bureau of Internal Revenue’s branding list.
The exec also pointed out that smuggling further encouraged consumption due to its accessibility.
“Records show that daily consumption of smuggled cigarettes alarmingly increased in 2021 versus 2022, from 12.1 cigarettes per day to 12.6 cigarettes per day, whereas for legal products, there was no change year on year, and the consumption level was significantly less at 10 sticks per day,” he said.
At present, tobacco is not part of the Anti-agricultural Smuggling Law. However, bills from both chambers of Congress are pushing for its inclusion so that tobacco smugglers can face stiffer penalties.
The chair of the senate hearing, Sen. Cynthia Villar, assured Van Dooren that tobacco would be included in the proposed law revisions.
“Rest assured that will include tobacco because that is the stand of Congress. They might not pass our version if we don’t include tobacco. So you have a very strong supporter from the House of Representatives,” said Villar.
While she did not specify who was the supporter in the Lower House, 1st District Ilocos Norte Rep. Ferdinand “Sandro” A. Marcos III (the son of President Ferdinand Marcos Jr.) filed a bill pushing for tobacco’s inclusion in the anti-agricultural smuggling law.
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