Tobacco revenues fall 2% to P185.7 billion in 10 months

MANILA, Philippines — Revenues from tobacco products fell two percent in 10 months to October this year, as pandemic restrictions hindered the conduct of raids against makers and distributors of illicit cigarettes.

Bureau of Internal Revenue (BIR) director Beverly Milo yesterday said tobacco industry revenues dipped to P185.74 billion in 10 months from P190.33 billion a year ago.

Excise taxes rose three percent to P154.08 billion, but VAT collection shrank 23 percent to P18 billion and income taxes dropped 21 percent to P13.66 billion.

Milo said the BIR has covered 2.32 billion sticks of cigarettes as of end-October, up by more than four percent from 2.23 billion sticks last year. However, the tax effort included just 211,621 sticks of cigars and 761,250 pieces of other tobacco products, down 41 and 15 percent, respectively.

Milo admitted the BIR carried out only five raids during the period from 12 last year, which she blamed on manpower shortage due to the pandemic. The agency filed three lawsuits before the Department of Justice against tobacco makers found violating laws on illicit trade.

As a result, seized products from raids plunged to nearly half at 2.47 million packs from 4.89 million packs based on records from the BIR.

Milo also said the BIR confiscated just six machines used in producing illicit tobacco and was unable to find any fake tax stamps for affixing on cigarette reams and boxes.

With fewer raids and apprehensions, estimated losses from the illicit trade of tobacco crashed 92 percent to P123.35 million from P1.6 billion, compelling lawmakers to demand that the BIR improve its tax monitor or else leakages that could be used to finance pandemic efforts will pile up.

Lawyer Noel de Luna of Philip Morris Fortune Tobacco Corp. said cigarettes worth P3 per stick proliferate mostly in Mindanao, especially Zamboanga, suspected to be coming from Indonesia and Malaysia. He doubted that these brands pay any taxes for them to retail at such a price.

Rep. Joey Salceda of Albay scored the BIR for using the pandemic as a reason for reducing the number of raids they executed this year. He said the agency should have adjusted by now to the challenges posed by the health crisis.

Milo, in response, said the BIR has taken multiple steps to expand the reach of their monitor on illicit tobacco, constituting a special team within the agency to look into cigarettes sold in digital platforms like Lazada and Shopee.

Milo said the BIR has reorganized the Strike Team, its dedicated group against illicit tobacco, to increase its manpower and widen its coverage.