Ilocos Rep. Angelo Marcos Barba | PHOTO: Official website of the House of Representatives / congress.gov.ph
A group of House leaders led by the cousin of President Ferdinand “Bongbong” Marcos Jr. filed a bill on Tuesday seeking to suspend the annual tobacco excise tax increases amid the alarming drop in revenue collections and the rise in illicit cigarette trade.
The multipartisan group which includes two House Deputy Speakers noted, “The twin objectives of the Sin Tax Law, which are to raise government revenues and protect public health, have come under immense strain from illicit trade.”
Article continues after this advertisementThe proposed measure, House Bill (HB) 11279, seeks to grant a 1-year temporary suspension of the automatic annual increase of 5 percent imposed on tobacco products, heated tobacco products, vapor products, cigars, and cigarettes.
FEATURED STORIES NEWSINFO House appropriations panel head steps down NEWSINFO ‘Show of force’: 1.8M join INC peace rally NEWSINFO Acop: What do you need 20 guns for?“Due to the prevalence of illicit tobacco products, the government’s excise tax collection has been declining since 2022. From a peak collection of PHP 176 billion in 2021, tobacco excise revenues decline to PHP 160 billion in 2022. In 2023, the Bureau of Internal Revenue (BIR) reported that the government has lost around 15.9% or PHP 25.5 billion in revenue due to illicit trade in cigarettes, ending collections in 2023 with PHP 135 billion,” House Bill 11279 noted.
“This lost revenue amounting to billions of pesos adversely affected the government’s funding for health programs,” the authors said.
free slots no depositArticle continues after this advertisementThe sponsors of the bill include Deputy Speaker and Isabela 1st District Rep. Antonio “Tonypet” Albano, Deputy Speaker and Ilocos Sur 2nd District Rep. Kristine Singson-Meehan, Ilocos Norte 2nd District Rep. Angelo Marcos Barba, Kabayan Party-list Rep. Ron Salo, Ifugao Lone District Rep. Solomon Chungalao, and PBA Party-list Rep. Margarita Nograles-Almario.
Article continues after this advertisementIn the bill’s exploratory note, the authors point out that efforts to curb smoking through high excise taxes on tobacco products may have inadvertently led to a significant rise in the illicit tobacco trade.
Article continues after this advertisement“While it is in the country’s legitimate interest to impose higher taxes to sin products, the increase in the amount of excise taxes imposed on registered cigarette products unintendedly resulted in the proliferation of illicit and counterfeit products due to their low-entry point and affordability,” the authors noted.
According to the authors, the total industry volume of illicit trade has more than doubled from 5.3 percent in 2020 to 13.2 percent in 2023, with the number of illicit cigarette smokers increasing to an average of 13.9 percent in the same year.
Article continues after this advertisement“It is imperative for the government to recalibrate its existing revenue measures and ensure that our tax laws do not unduly incentivize nor give premium to the illicit traders at the expense of legitimate business,” the bill noted.
The proposed temporary suspension is expected to result in a lower price gap between legitimate cigarettes and illicit cigarettes, curbing the further rise of the illicit tobacco trade.
House Bill 11279 further noted the link between illicit tobacco trade and the country’s national security.
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“Illicit trade of tobacco products, which may now include vapor products, have been linked to the financing of terrorist organizations,” the authors said.
Aside from shoring up revenue collections, the bill aims to “lessen the burden on legitimate businesses, level the playing field, discourage illegal trading practices, ensure fair competition in the market, and strengthen national security.”
“Destroying legitimate businesses through excessive taxation, while illicit traders continue to dominate the market is unacceptable. Such actions are counterproductive and undermines the nation’s goal fostering a stronger economy, which ultimately benefits the greater public,” the authors stated.
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