Illicit cigarette trade in the country worsened amid the pandemic, allowing smugglers to amass huge profits and depriving the government of much needed tax revenues.

At the recent Anti-Illicit Trade Conference “Plugging Revenue Leakage by Curbing Illicit Tobacco Trade,” authorities reported that illicit tobacco trade is costing the government around P30 billion to P60 billion in foregone revenues annually.

The estimate was based on a Euromonitor Report, which indicated that 13 percent of total tobacco products sold in the country were either counterfeit or illicit whites.

But the figures were higher in Mindanao where six out of 10 cigarettes sold in the market come from illegal sources.

For address the problem, Finance Assistant Secretary Dakila Elteen Napao said the Bureau of Customs, in close coordination with the Philippine Coast Guard, has been strengthening its capacities for border control, prevention of smuggling, and other customs fraud.

“The significant and continuous rise in illicit tobacco trade during this post-pandemic demands for stricter measures and strengthened collaboration,” Napao said.

“At checkpoints in Zamboanga, Davao and Cagayan de Oro, for instance, the Customs and PNP are closely working together on a tight watch to intercept the transport of smuggled goods via vessel and land,” he added.

Former House Rep. Jericho Nograles, who also chaired the Ways and Means Committee Technical Working Group, confirmed that illicit tobacco trade has been a malady that worsened due to pandemic restrictions.

“Restrictions, ironically, affected government agencies from functioning normally given our low capacity to enforce regulations in e-commerce,” Nograles said.

While the household budget shrunk during the pandemic, the demand for cheaper goods increased, Nograles observed.

“Smokers had to look for cheaper alternatives. The situation is so bad that some retailers in Mindanao are selling a pack of illegal cigarettes at 35 pesos,” he said.

Under the Bureau of Internal Revenue’s Regulation No. 7-2021, the minimum floor price per pack of cigarette is pegged at P82.49.

Tobacco is one of the most smuggled commodities in the world, creating unfair competition for legitimate businesses, as well as feeding organized criminal groups that channel profits obtained into other illegal activities such as drug trafficking.

Illicit tobacco also makes the product more accessible and affordable, especially among the youth.

Pushing to declare cigarette smuggling as an act of economic sabotage and make it a non-bailable offense, Senior Deputy Majority Leader Sandro Marcos proposed to Congress the immediate approval of House Bill 3917, which he principally authored.

The proposed law seeks to include tobacco, both in its raw form and as finished product, in the list of agricultural commodities whose illegal importation will be considered a heinous crime under the Anti-Agricultural Smuggling Act of 2016.

Under the proposed bill, cigarette smugglers face a minimum of 30 years imprisonment but not exceeding 40 years with no bail recommended.

At the same time, violators are obliged to settle a fine double the value of the seized smuggled items, plus the total amount of unpaid duties, and other taxes.