Majority of Filipinos are aware of the rampant smuggling and illegal sale of cigarette products in the country, with a significant number expressing concerns about the associated health risks, a Pulse Asia survey showed.
Pulse Asia President Ronald Holmes presented the findings in a forum organized by consumer group Bantay Konsyumer, Kalsada, Kuryente. The commissioned survey was conducted in December 2023 with 1,200 adult Filipino respondents.
Some 57 percent of respondents said they have either seen or heard that illegal cigarette products are being sold in the country. Awareness is highest in Mindanao at 84 percent, followed by the Visayas (60 percent), and the rest of Luzon (47 percent). The lowest level of awareness is reported in Metro Manila at 42 percent.
“Maybe the enforcement in preventing the sale of these products in the National Capital Region is much more than what they’ve seen in other subnational areas,” Holmes said.
Consumers are drawn to illegal cigarette products primarily due to their cheap prices, according to 71 percent of respondents. Some 12 percent said it’s because these products are more accessible. In Mindanao, a pack of smuggled cigarettes can be bought for as low as P30/pack, much lower than a pack of legal, tax-paid cigarettes at P120/pack. The price of smuggled cigarettes is even lower than the excise tax of P63/pack that government collects from legitimate players.
When asked about the “most worrisome consequence” of smuggled cigarette products, 46 percent answered “additional health problems due to the risk of unknown products.” Approximately 41 percent are worried it would lead to a spike in the number of smokers given the lower price of smuggled or illegal cigarettes, while 11 percent are concerned about lower tax collection.
Citing Finance Secretary Ralph Recto, columnist Bienvenido “Nonoy” Oplas, Jr. of the think tank Minimal Government Thinkers stressed that excise tax revenues from tobacco are falling due to the smuggling and illicit trade of cigarette and vape products.
He explained that the P55/pack tobacco tax rate resulted in a decline in revenues, yielding only P160 billion for the government in 2022. In 2023, the P60/pack tax rate for tobacco further decreased the government take to just P135 billion as illicit cigarettes became even more attractive to consumers. These are lower than the record-high P176 billion collection during 2021 with a P50/pack tax rate indicating a downward trend.
This seems to be the “optimal tax rate (P50/pack),” Oplas said.
Assistant Secretary Amanda Nograles of the Department of Trade and Industry (DTI) Consumer Protection Group agreed there’s no need to raise taxes.
“When we increase the tax, it will not invite nontaxpayers to pay taxes. If you increase the tax, you’re effectively punishing those who are properly paying their tax,” Asec. Nograles said.
Of particular concern is the smuggling of vape products, according to BK3 convenor Karry Sison.
“It is undeniable that the vaping industry is a 15-billion-dollar industry globally, with local figures claiming that Philippine consumption is worth around P13 billion. Given those figures, the Philippines is supposed to be able to collect more than P5 billion in taxes, but the Bureau of Internal Revenue’s collection on said industry only reached P138 million in 2022,” Sison said.
“This shows further how vape products are able to enter the market without being subjected to the appropriate tariffs and taxes to the detriment of our economy,” she said.
Oplas added that tax increases only result in more business for smugglers and illegal sellers that offer an alternative.
“‘High tobacco taxation to reduce smoking’ is a fake and failed narrative… More smoking happens because people shift to the illicit,” Oplas said.
The same survey found that 26% of Filipinos are tobacco smokers, with more than half (16%) smoking daily. Holmes noted that this is higher than the tobacco use recorded in the 2021 Global Adult Tobacco Survey which found that 19.5% or more than 15 million Filipinos used tobacco.
The government is cracking down on the illegal sale and smuggling of vape products through mandatory testing and registration of vapes, and the imposition of excise tax stamps, among other measures.
