Quantcast
Latest Stories

Illegal cigarette trade seen to cost gov’t P8B a year

By

Next to oil smuggling, the illicit trade of cigarettes has become a key concern of the Philippines, with the government seen to lose a potential revenue of P8 billion this year, LTG Group president Michael Tan said.

Speaking to reporters after the annual stockholders meeting of LTG, Tan said the underground domestic manufacturing of cigarettes and the smuggling of products from abroad have been fueling the illegal trade.

LTG is a key partner in the country’s leading cigarette-maker Philip Morris Fortune Tobacco Corp. Inc.

In other Asian countries, Tan said, the illegal tobacco trade has grown to “astronomical proportions.”

“It is eroding government revenues and also affecting legitimate businesses,” he explained.

He estimated that, since the start of the year, the illegal trade had cost the government P3 billion in foregone duties, excise taxes and value added tax (VAT). For the full year, the amount is expected to reach P8 billion.

The lost revenue is said to be enough to build 35,000 additional classrooms this year.

“I think next to oil, [illegal cigarette trading] will be the rising threat,” Tan said.

Based on estimates of key oil industry players, the government loses P30 to P40 billion from oil smuggling a year.

Local manufacturers who do not pay the proper taxes are said to account for about 90 percent of the illicit tobacco trade. The sale of smuggled products accounted for the rest.

A year ago, illegal tobacco traders comprised 4 percent of the market. Today, they account for almost 10 percent, Tan said.

The data was derived from a Nielsen audit on the volume of cigarettes absorbed by the local market.

Tan presented the results of a Nielsen retail survey where a total of 301 million packs of cigarettes had been absorbed by the local market from January to April this year. But taxes paid to the Bureau of Internal Revenue suggested that only 125 million packs were sold.

Last May, it was also reported that the Bureau of Customs seized shipments of counterfeit Marlboro, Winston and Fortune cigarettes alongside other fake food items from China.

“We have to work hand in hand with the government to curtail and stop this,” Tan said.

In the second half of 2013, LTG expects its tobacco business to fare better.

“It depends on how we control the illicit trade,” he said.


Follow Us


Follow us on Facebook Follow on Twitter Follow on Twitter


Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Business , Government , Illegal Cigarette Trade , LTG group

  • Ako_Hiking

    So basically more problems for the Aquino Administration and his Customs. Cigarette is already unhealthy and now it is not only causing illegal activity to take place but it is costing the Philippines’ P8B? What a waste of money and potentially Filipino health.

  • joboni96

    psy war lang ng intsik switik yan
    na tinamaan ng sin taxes

    bir i monitor niyo ito

  • disqus_EWrSdjV1nv

    ilegitimize nila ang drugs. 1 trillion peso industry yan.
    basta may drugs… smuggled na agad yan. may sales walang resibo. pati pulis pwede nang bawasan kasi salesman sila ng drugs. dami rin na guns na involved, fast cars… and yes. its more than 1 trillion peso industry.
    dadami pa turista. drug tourism.
    ilegitimize na rin ang pok2 para may philhealth, pag-ibig etc.
    mababawasan pa traffic kasi high lahat… nasa langit at wala sa kalsada.
    lalakas ang alcohol industry.
    ganun din ang yosi.
    total isang bayan na puro tambay naman ang pinas kaya….
    Mabuhay!!!

  • rickysgreyes

    We need another Kim Henares at Customs, not a politician

  • farmerpo

    Champion blue seal, welcome back. Alam naman ng karamihan kung saan binababa ito kaya lang ang mga custong agents mismo ang namamahala paris din ng dati. Freeport zone kuno.

  • Prangka

    Tinaas ang buwis sa ginto, 80% ay ibenenta sa black market. Tinaas ang tax sa yosi,nauuso uli ang blue seals. In theory, riasing taxes mean more capability for the government to carry out its program but in actuality the government either loses revenue or break-even lang in the long run. The tax only puts more burden to honest tax payers and a reason for evaders to enjoy higher income.



Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94
Advertisement
Advertisement

News

  • What Went Before: Malacañang allies alleged involvement in pork scam
  • Timeline: Napoles tell-all
  • 12 senators on Napoles ‘pork’ list, says Lacson
  • Napoles surgery in Makati hospital successful
  • Save the queen? Aide takes fall for Enrile, Gigi Reyes
  • Sports

  • Mixers trim Aces; Painters repulse Bolts
  • Donaire junks Garcia as coach, taps father
  • ’Bye Ginebra: No heavy heart this time
  • UAAP board tackles new rules
  • Baguio climb to decide Le Tour de Filipinas
  • Lifestyle

  • The best flavors of summer in one bite, and more
  • Homemade yogurt, bread blended with pizza, even ramen
  • Visiting chefs from Denmark get creative with ‘ube,’ ‘ buko,’ ‘calamansi,’ mangoes
  • Salted baked potatoes
  • A first in a mall: Authentic Greek yogurt–made fresh in front of diners
  • Entertainment

  • Return of ‘Ibong Adarna’
  • Practical Phytos plans his future
  • In love … with acting
  • From prison to the peak of success
  • ‘Asedillo’ location thrives
  • Business

  • This time, BIR goes after florists
  • Philippine Airlines to stop shipment of shark fins
  • PH banks not ready for Asean integration
  • Stocks down on profit-taking
  • Banks allowed to use ‘cloud’
  • Technology

  • ‘Unlimited’ Internet promos not really limitless; lawmakers call for probe
  • Viber releases new design for iPhone, comes to Blackberry 10 for the first time
  • Engineers create a world of difference
  • Bam Aquino becomes Master Splinter’s son after Wiki hack
  • Mark Caguioa lambasts Ginebra teammates on Twitter
  • Opinion

  • Editorial cartoon, April 24, 2014
  • Talking to Janet
  • Respite
  • Bucket list
  • JPII in 1981: walking a tightrope
  • Global Nation

  • PH seeks ‘clearer assurance’ from US
  • China and rivals sign naval pact to ease maritime tensions
  • What Went Before: Manila bus hostage crisis
  • Obama arrives in Tokyo, first stop of 4-nation tour
  • Believe it or not: Filipinos love US more than Yanks
  • Marketplace