Senator Sherwin Gatchalian has announced his intention to develop strategies to tackle the illegal trade of cigarettes and vaping products, aiming to mitigate the government’s revenue shortfall and address the health hazards linked to smoking and vaping. According to data from the Bureau of Internal Revenue (BIR), the government anticipates a revenue loss of PHP40 billion from 2021 to 2024 due to this illicit trade.
Gatchalian suggests enhancing the role of local government units (LGUs) in a collaborative effort across agencies. He emphasized that LGUs, being closely connected to community activities, should be empowered to enforce regulations against the illegal trade of excisable goods. Additionally, he advocates for specific penalties for manufacturers, distributors, and retailers involved in the unlawful handling or distribution of tobacco and vaping products, alongside increased funding for law enforcement.
During a session of the Senate committee on ways and means, which Gatchalian chairs, it was revealed that tax collections from these products fell from PHP174 billion in 2021 to PHP134 billion in 2024. Gatchalian stressed the need to hold retailers accountable for possessing illicit products, arguing that they contribute to the health risks faced by the public.
He also called for the involvement of the Anti-Money Laundering Council (AMLC) to monitor financial transactions related to the illegal trade, pointing out that such activities not only generate profits but may also fund criminal endeavors, including terrorism.
Gatchalian has put forward initial recommendations for government action, some of which require budgetary allocations, while others are policy-driven and do not necessitate new legislation. He urged the Department of Finance to consider these proposals seriously.
Further recommendations include implementing a uniform tax rate on all vaping products, applying an ad valorem tax on vaping devices, utilizing track and trace technology, enhancing international cooperation, activating the Anti-Agricultural Economic Sabotage Council, intensifying efforts against retailers, bolstering enforcement against online marketplaces and e-retailers, and improving the prosecution and conviction rates of offenders.