Raids conducted by the Bureau of Internal Revenue’s (BIR) “strike team” against the illicit trade of cigarettes have already yielded over P1.2 billion in counterfeit sticks and fake tax stamps at a time when the government needed more revenues to finance its COVID-19 response.
BIR Deputy Commissioner Arnel S.D. Guballa told the Inquirer they confiscated almost 4.9 million fake cigarettes worth P219.9 million during eight raids from January to June.
During the same period, the BIR also seized 22.3 million pieces of counterfeit internal revenue stamps, which resulted in foregone revenues of more than P1 billion.
Guballa said selling fake cigarettes and using counterfeit stamps were deemed “lucrative” as the excise tax rate rose at the start of the year. Republic Act No. 11346, or the Tobacco Tax Law of 2019, increased the cigarette excise tax to P45 per pack last Jan. 1.
Guballa said the BIR was backing up moves in Congress to slap stiffer penalties against unscrupulous businesses engaged in the trade of counterfeit cigarettes.
The House ways and means committee early this month approved House Bill No. 6507, which would institutionalize the creation of the strike team.
According to minutes from the House committee, this strike team “will lead the BIR’s enforcement activities against locally manufactured counterfeit tobacco products.”
“The amount of P200 million shall be earmarked annually for the task force to be used for the following: salaries, transport, hauling and destruction expenses, including the hiring of third-party security service providers for the storage facilities, and intelligence gathering, etc.,” the minutes read.
The committee also approved the creation of a technical working group that “would deliberate on proposals to strengthen the penalties against illicit traders of tobacco,” one of which was to impose a penalty worth 500 percent of the value of seized items.
Other proposals included stronger BIR regulatory authority over locators in special economic zones and the suspension of licenses pending investigation.
Last week, the Department of Finance reported that the muted demand amid the lockdown and a surge in counterfeit sticks slashed the number of tax stamps issued to manufacturers and, in turn, resulted in lower revenues collected from cigarettes from March to June.