Biz leader: Cigarette smuggling rampant

CLARK FREEPORT— Federation of Philippine Industries president Jesus "Jess" Arranza yesterday bared the prevalence of cigarette smuggling in the country.

Arranza made the statement during Wednesday’s press conference with Pampanga Press Club at Hann Casino Resort here.

Arranza said the illegal cigarette trade alone costs the country P250 billion in supposed revenue every year.

For 2022 alone, provinces in Central Luzon like Pampanga, Zambales, Bataan and Nueva Ecija recorded high incidences of illegal cigarettes in the local market.

Some 25 provinces recorded incidence of illegal smuggling in 25 provinces in the country for 2022, slightly higher from the 22 recorded provinces in 2021.

Data presented by Arranza showed 10.5 percent higher incidence of illicit cigarette trade in the 25 provinces particularly in the provinces of

Mindanao.

In Central Luzon, the incidence of illegal cigarette trade was higher than the national average. Pampanga alone recorded 15.7 percent.

Arranza said that high taxes of cigarettes have resulted into more smuggling of illegal cigarettes which takes advantage of cheap production that bypass regulatory procedures.

Since the passage of the Sin Tax Law in 2012, excise tax rates on tobacco products have been increasing annually.

From the lowest tax rate of P2.70 per pack (lowest in 4tiers), excise tax is now at P60 per pack (unitary rate; no distinction for low, mid, high or premium) or almost 2,000% i ncr ease.

Illicit whites or those unregistered cigarettes whose manufacturer or importer are not known and have no lawful distribution in the Philippines are most common in Mindanao, Palawan and Central Luzon (Pampanga, Bulacan, Zambales, Bataan, Nueva Ecija, Nueva Viscaya, Tarlac and Pampanga).

These illicit whites sell for as low as P30 per pack making it affordable and appealing to the youth.

Illicit whites predominate the local market.

Brands such as Two Moon, Royal, Canon, Modern, Fort, President, D&B, Carnival and Dunston are available and sold at a very cheap price of P35. This is unusual considering that excise tax is already P60.

These are widely available in Pampanga, particularly in Arayat and Candaba public markets, as well as in Apalit, Arayat, San Luiz, Sta. Rita, San Fernando, Angeles, Guagua, Floridablanca and Por ac.

In Bulacan, known hotspots for these illegal cigarettes are Angat, Calumpit, Malolos, Pulilan, Plaridel, Pandi, San Ildefonso, San Miguel, and Sta. Maria.

“The illegal cigarette trade has been depriving the industry of valuable revenue that could otherwise been used by government,” Arranza said.

He added that smuggling has affected several industries like sugar, rubber, onions and even other valuable commodities.