Close to P16B in ‘sin’ taxes lost to illegal cigarette trade in 2013 – study

The government failed to collect close to P16 billion in taxes last year due to the illegal cigarette trade, according to a study by the Oxford Economics and International Tax and Investment Center.

According to a report on "Saksi" aired Friday night, some tobacco products have not been taxed properly following the implementation of the sin tax law.



It showed a six-fold increase in uncollected tax from P2.6 billion in 2012 to P15.6 billion in 2013.

In addition, consumption of illicit cigarette products increased three-fold from P6.4 billion in 2012 to 19.1 billion in 2013.

Bureau of Internal Revenue Commissioner Kim Henares said they are already looking into the issue.

“We have been investigating this but this is merely a market study and an estimate without any strong evidence that is admissable under a court of law,” Henares said.

But Jesus Arranza of the Federation of Philippine Inudstries thinks there may be technical smuggling involved in the sudden increase of figures.

Arranza alleged that some companies bribe officials from the Bureau of Customs (BoC) to fuel their illicit tobacco trade.

“Ang smuggling ay parang sayaw na tinikling. So 'yan ang Customs, broker at tsaka yung importer. Kung ang isa diyan ay ayaw, walang tinikling. Magkano ang nawawala sa smuggling sa ating bansa? 'Yun lang buwis na nawawala P200 billion a year,” he said.

Meanwhile, the BoC said in a statement that they are continuously combatting corruption within the organization.

“Patuloy ang audit namin sa mga cigarette companies na involved dito,” the statement read.

The sin tax law was implemented in 2013 and will gradually increase the tax on so-called "sin products" like tobacco and alcohol until 2017.

The gradual increase in sin taxes is as follows:

2013 – P12
2014 – P17
2015 – P21
2016 – P25
2017 – P30

Part of the tax collected by the government from the increased prices will be used to fund health programs. — Andrei Medina/JDS, GMA News