Press Release - Gatchalian raises alarm over rampant smuggling, illicit trade of excisable products

Senator Win Gatchalian sounded the alarm over the widespread smuggling and illicit trade of excisable products, including cigarettes and vapes, saying such activities erode revenue collection, pose health concerns, and create peace and order issues.

"My worry is a reversal in smoking prevalence trends. We previously had a win-win situation where smoking prevalence was decreasing while tax collection was increasing. However, the trend has now reversed. We are now in a lose-lose situation with smoking prevalence rising and tax collection declining," Gatchalian said.

Data from the Bureau of Internal Revenue showed that excise tax collection has steadily declined, reaching only P130.9 billion from January to November last year, compared to P134.9 billion in 2023, P160.3 billion in 2022, and P176.5 billion in 2021.

Gatchalian also noted that while the overall cigarette market declined from 103.3 billion sticks in 2014 to 55.6 billion sticks in 2023, the market share of illicit trade rose from 12.2% in 2014 to 19.8% in 2023. "We don't want the value of illicit trade to surpass that of legitimate entities," he said, pointing out that smokers now prefer smuggled cigarette products due to their significantly lower prices.

"In my opinion, enforcement is not enough. We have to look at the other causes of illicit trade in our country. We cannot ignore the theory of incentives given the significant price difference between illicit cigarettes and legitimate ones," he added.

"We must recognize the harm this causes - not just in lost revenue but also on health risks, as these activities operate under the radar," Gatchalian said.

"There should be a whole-of-government approach," he said, urging the finance, trade, and health departments to develop a strategy to address the issue. He also called on law enforcement agencies, including the Philippine National Police and the Bureau of Investigation to investigate those behind the smuggling and illicit trade of excisable products.

The lawmaker noted reports that cigarette smuggling funds terrorist and rebel groups in Mindanao. "Another consequence is that profits from illicit trade are reportedly being funneled into terrorism, making