Solons back heftier penalties for cigarette smugglers

July 24, 2020

LAWMAKERS on Friday strongly backed the proposal of Finance Sec. Carlos “Sonny” Dominguez to impose heftier penalties for cigarette smugglers as one of them went on proposing to make tobacco smuggling/counterfeiting a non-bailable offense.

Surigao del Norte Rep. Robert Ace Barbers said restrictive and deterrent provisions against cigarette smuggling must be introduced such as making it non-bailable offense, imposing higher monetary fines and much longer jail time.

“We should impose stiffer penalties on this illicit practice of counterfeiting and charge them with economic sabotage and tax evasion.

It is stealing from government coffers by not paying the right taxes or evading paying such. Congress should make this a non-bailable offense and if I had my way, in my opinion, let’s impose a capital punishment,” said Barbers, the chairman of the House committee on dangerous drugs.

Albay Rep. Joey Sarte Salceda, the chairman of the House committee on ways and means, assured Dominguez that his panel will immediately
deliberate his request once a formal bill is filed before the House of Representatives.

While supporting higher penalties, Salceda said the best way to crack down on illicit trade is still to have a modern enforcement system since the “syndicates won't stop, because that's their way of life.”

“I tend to agree that we should impose stiffer fines and penalties, but let us study national and international experience. Definitely, as soon as there is an Executive proposal, my committee will hear it urgently. That's why we always have to be ahead of them in terms of intelligence, detection, and apprehension,” said Salceda, an economist.

ACT-CIS party-list Rep. Eric Yap, a member of the House committee on ways and means and chairman of the House committee on appropriations, backed the proposal to include more jail time on massive shipment of smuggled goods.

“We need a stronger deterrent against smuggling and obviously, what we have right now is insufficient,” said Yap who expressed belief that both the Bureaus of Internal Revenue (BIR) and Customs (BoC) have been doing a good job.

“The mere fact that we have a steady increase of seizures of these goods proves that BOC and BIR is doing its job right. Unlike in the previous administration, the government is stepping up its efforts to combat smuggling. I will support any move to impose stiffer penalties,” said Yap.

Quezon City Rep. Jesus “Bong” Suntay, a member of the House committee on ways and means and chairman of the House committee on human rights, said he supports “the plan of the DOF to look into existing laws on smuggling and impose heftier fines.

“I believe syndicates have been continuously been undertaking smuggling operations because of the amount of money they are making.

Despite numerous successful raids, paying fines and bribes are still the norm and makes the risk worthwhile for them,” said Suntay, but opposed Barber’s proposal to make cigarette smuggling a non-bailable offense.

“I don’t think that we need to go as far as making cigarette smuggling a non-bailable crime, it would be sufficient enough just to revise the law and impose stiffer fines and penalties,” said Suntay.

Deputy Speaker and Surigao del Sur Rep. Johnny Pimentel, an ex-officio member of the House committee on ways and means, also supported the DoF’s proposal.

“I support the plan of the DoF to review existing laws regarding smuggling especially of cigarettes. If there is a need to amend a provision of the law, I’m willing to author the said amendment. Well, it will be up to the concerned committee to decide on that (making it a non-bailable offense), maybe it will depend on d volume that has been smuggled.”

House Assistant Majority Leader and Quezon City Rep. Precious Hipolito, a vice chairperson of the House committee on Metro Manila development, expressed belief that “we have to update penalties imposed on smuggling.”

“Smuggling has been so brazen, organized and systematic now. The situation even gets worse because of technology something that is absent when they crafted the old statutes. Tougher penalties should be imposed if we want to curb smuggling,” said Castelo.

House Assistant Minority Leader and Marikina City Rep. Stella Quimbo, a member of the House committee on ways and means, said “enforcement is key, rather than increasing penalties.

“In the case of agricultural smuggling, while it is a non-bailable offense, it persists,” Quimbo, wife of former Marikina City Rep. Miro Quimbo who used to be the chairman of the House committee on ways and means during the Aquino administration, lamented.

“There has to be enforcement, done in a consistent and predictable manner. Another aspect of enforcement is monitoring by the DoF.

The monitoring framework should begin with a credible estimate of the extent of smuggling, use of data to generate intelligence on the patterns of smuggling, and finally, BIR and BoC should be given reasonable targets. Moreover, a projected reduction in smuggling should be part of annual tax revenue targets of the BoC and the BIR. This way, the agencies are also compelled to seriously undertake enforcement,” said Quimbo, an economist. Ang Probinsyano party-list Rep. Ronnie Ong, a member of the House committee on ways and means, also rejected making cigarette smuggling a non-bailable offense.

“I’m not for that. We already have enough safeguards. Why not look into PCSO (Philippine Charity Sweepstakes Office) MOBILE lottery to
raise funds instead,” said Ong.

With the persistent cigarette smuggling problem, it show that not even a P50 million minimum cash fine and a possible jail time of eight to 12 years have deterred illicit traders of tobacco from plying their criminal trade and deny government of much-needed tax revenues running to billions.

This despite the back-to-back successful raids of warehouses, factories, container trucks and even residential houses storing smuggled and counterfeit cigarettes by crack teams of the BoC, BIR and law enforcement agencies, the government is still baffled on why smuggling syndicates are not letting up on their criminal activities.

The DoF earlier reported that illicit traders practically made a killing during the pandemic lockdown starting middle of March when
legitimate cigarette firms were barred from transporting and, thereby, selling their products to their customers.

Illicit traders seized on the opportunity by addressing the shortage in supply with their smuggled and worse, fake cigarettes which they even priced higher than the regular legal cigarettes brands because of the overwhelming demand.

This prompted the DOF to convene a group of experts to look into the loopholes of existing laws and address it with possible amendments or changes to make the penalties much stiffer and heftier.

Dominguez said his agency is looking into slapping heftier penalties on unscrupulous traders of illicit cigarettes, who took advantage of higher excise taxes and a dwindling supply of tax-paid sticks at the height of the COVID-19 lockdown.

“If you recall, when the law increasing the excise taxes on tobacco products was passed, we warned of a possible increase in illicit trade,” Dominguez said, referring to Republic Act (RA) No. 11346 or the Tobacco Tax Law of 2019, under which cigarette excise tax increased to P45 per pack effective Jan. 1, 2020. 

Under Section 263 of the National Internal Revenue Code, persons or companies caught in possession of cigarette products that did not pay
excise taxes face an imprisonment of 10 years to 12 years.

A person caught with smuggled or counterfeit cigarettes will be fined 10 times the value of the payable excise taxes or not less than P1M
and a minimum jail time of 5 years.

A company such as manufacturer or importer faces a minimum cash penalty of P50M and a jail time of at least eight years.