PH Govt Loses ₱250B in Revenue Due to Smuggling

According to Fight IT (Illicit Trade) Chairman Jesus L. Arranza, who also chairs the Federation of Philippine Industries, “Smuggling is creating unfair competition for locally produced goods because it erodes the local market of cheaper, no value-added tax or undervalued and substandard imported goods displacing the locally produced commodities,”

Referring to a report from the Organisation for Economic Co-operation and Development (OECD), the total global illicit trade revenues are predicted to be about $870 billion each year, equivalent to 1.5% of the global gross domestic product.

Arranza adds that smuggling would cause job displacement due to downsizing production, exposing physical and health risks to consumers, and displacing government revenue from uncollected customs duties and taxes.

Arranza has said that the industries affected by the illegal trading include cigarette manufacturing, sugar, coconut oil, liquified petroleum gas tanks, tires, and textile and garments.

It was highlighted that 14% of cigarettes circulating in the Philippines are from smuggling. “If we have a market of 60 billion sticks, around nine billion sticks are illicit,” said Arranza.

He estimates that the excise tax’s revenue loss is approximately ₱24.7 billion. Arranza adds that the majority of the illegal cigarettes come from countries like China, Cambodia, and Vietnam and pass through Tawi-Tawi and Sulu.

“In Mindanao, half of the stores sell illicit cigarettes, openly displayed. In Metro Manila, it’s not so bad. In some provinces it’s rampant like in Lanao del Norte,”  he mentions. “It’s so enticing to bring in cigarettes, it doubles exponentially.”

Source: Business World