The Bureau of Internal Revenue highlights overwhelming growth in sin tax collection as an indication of the inconclusiveness of a report alleging the fast-rising illegal cigarette trade in the country.
In a report prepared by the International Tax and Investment Center and Oxford Economics entitled “Asia-14 Illicit Tobacco Indicator 2013”, it is alleged that of the 105.5 billion cigarettes locally sold in 2013, 18.1% is attributable to illicit consumption.
“The growth in collections on sin taxes disproves the allegations that the government is losing revenues through illicit trade.”
The BIR collected a total amount of Php100.9 billion in excise taxes from sin products in 2013, with the incremental revenue under the sin tax reform amounting to to Php51.1 billion. This total collection is 81.2% higher compared to 2012 of Php55.7 billion. Likewise, for the first three quarters of 2014, total collections reached Php78.3 billion which is 27.7% higher than the collection made in the same period of 2013, an excess of Php13.8 billion or 21.4% as compared to the goal of Php64.5 billion.
The BIR also belies the said report on the ground that the data used in the said report is incomplete and lacks proper attribution as to source.
As compared to the report, the BIR data of cigarette removals/consumption of 107.2 billion sticks (84.9% accounted for Domestic Consumption,1.8% for Importations/Inflows, and 13.3% for Exports/Outflows) is 1.7 billion sticks greater than the Oxford Economics’ reported data of 105.5 billion sticks inclusive of the alleged illicit 19.1 billion sticks.
Likewise, the 2012 BIR data of cigarette removals/consumption of 129.1 billion sticks is 20.4 billion sticks higher than the 2012 Oxford Economics’ reported data of 108.7 billion sticks removed/consumed inclusive of the alleged illicit 6.4 billion sticks.
The BIR is not discounting the fact that illicit consumption of cigarettes exists as it has become a worldwide concern.
“The Bureau, together with the Bureau of Customs, has been very consistent in its fight against smugglers of goods as this affect our revenues,” Commissioner Jacinto-Henares said. “We implemented various measures to counter illicit cigarette activities such as implementation of stamp tax on cigarettes. We have also acted on reports by sectors to address allegations of misdeclaration / underdeclaration, and we are strictly monitoring removals of cigarettes products to ensure that those that are sold in the market are properly taxed.”
