Senator Sherwin Gatchalian announced on Friday his plan to intensify efforts against the illicit trade of cigarettes and vapor products, aiming to curb significant revenue losses for the government and mitigate health risks associated with smoking and vaping.
Citing data from the Bureau of Internal Revenue (BIR), Gatchalian highlighted that the government incurred a staggering P40 billion in revenue losses due to illegal trade from 2021 to 2024.
One key measure he proposed is leveraging the involvement of local government units (LGUs) in tackling this issue.
“LGUs are in the best position to address this problem. They are on the ground daily and must be empowered or deputized to crack down on the illicit trade of excisable products,” Gatchalian stated.
He also called for stricter penalties for manufacturers, distributors, and retailers involved in the unlawful possession or diversion of tobacco and vapor products from production facilities. Additionally, he proposed allocating more resources to law enforcement agencies to combat illicit trade effectively.
During a hearing before the Senate committee on ways and means, chaired by Gatchalian, the BIR revealed a steep decline in collections, dropping from P174 billion in 2021 to P134 billion in 2024.
“We recommend targeting retailers directly. Retailers found in possession of illicit products should be held accountable. If we recognize the health hazards of smoking and these illegal products, we must ensure that retailers, as key conduits, are also held liable,” he said.
Gatchalian also urged the Anti-Money Laundering Council (AMLC) to monitor financial transactions related to illicit trade, emphasizing reports linking profits from these activities to criminal enterprises and even terrorism.
“Illicit trade generates significant profits, some of which are used to fund criminal activities, including terrorism. The AMLC must identify and track those profiting from these illegal transactions,” he stressed.
The senator outlined policy recommendations to address the issue, many requiring no new legislation. Among these are:
- Imposing a single tax rate on all vapor products and an ad valorem tax on vaping devices.
- Adopting track-and-trace technology to monitor the movement of excisable goods.
- Enhancing intercountry cooperation to combat cross-border smuggling.
- Strengthening enforcement against e-marketplaces and online retailers selling illicit products.
- Improving prosecution to secure convictions against offenders.
- Convening the Anti-Agricultural Economic Sabotage Council to address the broader implications of illegal trade.
“We urge the Department of Finance to consider these proposals seriously. While some measures may require additional funding, many are policy-based solutions that can be implemented immediately,” Gatchalian said.
Through these initiatives, Gatchalian aims to safeguard government revenues and public health while addressing the broader socio-economic consequences of illicit trade.