SENATORIAL candidate and Ilocos Norte Gov. Imee Marcos urged the government to crack down on cigarette smugglers and manufacturers of counterfeit tobacco products who flood the market with their contraband and study carefully the impact of any massive cigarette excise tax increase on poor people like farmers and sari-sari store owners.
“Fake cigarettes seized in 2018 hit a record-high of P20.250 billion, depriving the government of much-needed revenues,” Marcos said.
“The twin scourges of smuggled and fake cigarettes are strangling tobacco farmers who will again bear the brunt of the proposed hike in excise tax by at least P60 per pack,” she lamented.
“The looming increase in excise tax exponentially increases the incentive for tax evasion either through the smuggling of cigarettes or the manufacturing of fake tobacco products,” Marcos stressed.
“We are killing a legitimate industry that provides livelihood to more than two million Filipinos while we let smugglers and illegal manufacturers enrich themselves by flooding the market with fake products and by depriving the government of revenues that can help our tobacco farmers,” she said.
The government had its largest haul of pirated goods last year, most of which were contraband cigarettes, the Intellectual Property Office of the Philippines revealed.
The Bureau of Internal Revenue also destroyed machines and equipment used to mass-produce fake cigarettes in Pampanga and Pangasinan last month.
Marcos cited a report by the Department of Finance, which states that a single cigarette-making machine is capable of producing 20,000 sticks per minute, or about 480,000 packs per day. The DoF said the illegal operation of the fake cigarette-making equipment is defrauding the government of as much as P16.8 million revenue per day.
Marcos said that if the next round of sin tax hike pushes through, the government should help tobacco farmers and small retailers like sari-sari store owners cope with their potential revenue loss.
“Government must not lose track of the need to help tobacco farmers. They must benefit from the increases in excise tax,” she said.
“The expected higher revenue from sin tax collection must be used to bankroll alternative agriculture-related livelihood for affected tobacco farmers,” Marcos added.
Marcos said cigarette sales have decreased as prices have more than tripled since 2013, and this, according to the National Tobacco Administration, has translated to a drop in farm output by as much as 20 million kilos annually.
“This is a big blow for our tobacco farmers whose marginal existence is already being threatened by soaring prices of basic goods amid high inflation,” she bewailed.
Under Republic Act 7171, tobacco-producing provinces like Ilocos Norte with an annual average production of not less than one million kilos of Virginia tobacco are entitled to 15 percent of the excise tax collections from locally-manufactured Virginia-type cigarette.
Local government units must utilize the fund for programs that “advance the self-reliance of tobacco farmers” through cooperatives, livelihood, and agro-industrial and infrastructure development such as farm-to-market roads.