House bill classifying tobacco smuggling as economic sabotage passed on 2nd reading

The House of Representatives on Tuesday approved on second reading House Bill 3917, which classifies the smuggling of tobacco, whether manufactured or unmanufactured, as large-scale smuggling or economic sabotage.

The measure, approved via voice vote during Tuesday’s plenary session, amends the Anti-Agricultural Smuggling Act of 2016 as well as Sections 2530 and 2531 of Republic Act No. 193 or the Tariff and Customs Code of the Philippines.

House Bill 3917 defines manufactured tobacco as any product that consists of loose tobacco that contains nicotine and is intended for use in a cigarette, including any product containing tobacco and intended for smoking or heating or puffing, or oral or nasal use.

On the other hand, the measure defines unmanufactured tobacco as agricultural components derived from the tobacco plant which are processed for use in the manufacturing of cigarettes and other tobacco products.

The measure carries a penalty of 30 to 40 years in jail and a fine of twice the fair value and the aggregate amount of the taxes, duties and other charges by the smuggling of tobacco, whether manufactured or unmanufactured, including finished products such as cigars, cigarettes or heated tobacco products.

In addition, the bill regards offenses for tobacco smuggling as non-bailable.

“Estimates of the national government's foregone revenues due to the rampant proliferation of illegal cigarettes range from P30 to as much as P60 billion. Global think-tank Euromonitor estimates Philippine government revenue losses to reach P26.2 billion in 2022 and another P31 billion by 2023 because of this criminal activity,” the explanatory note on the measure read.

“Thus, there is an urgent need to combat large-scale tobacco smuggling by imposing more stringent penalties and deter the entry and sale of illegal tobacco in the Philippines. This bill seeks to include tobacco, both in its raw form or as finished products, as among the agricultural commodities the illegal importation of which can be classified as constituting economic sabotage,” it added.

The authors of the measure also argued that the continued proliferation of smuggled cigarettes is inconsistent with the government's concern for public health, given that the current taxation and regulation only covers the legal tobacco industry but allows illicit cigarettes to run rampant.

“Aside from directing concerned agencies to strictly implement existing laws, legislators should also enact laws to plug loopholes to control illegal tobacco. If the entry and sale of smuggled cigarettes continues unrestricted, the national government stands to lose even more revenues,” the explanatory note on the measure stated.

“[As such,] this will be detrimental to its pandemic recovery efforts. Clearly, this is one of the biggest tax leaks that the government needs to plug. In view of the foregoing, the passage of the bill is earnestly sought,” it added.

The authors of the measure include Representatives Wilfrido Enverga of Quezon, Ferdinand Alexander Marcos of Ilocos Norte, and Margarita Ignacia Nograles of the PBA party-list, among others. — DVM, GMA Integrated News