Tobacco tax up and down in Philippines

The Philippines’ government “lost” an estimated PHP15.6 billion in taxes last year due to the trade in illicit tobacco products, according to a story in The Philippine Star quoting a report by the U.K.-based Oxford Economics and the U.S.-based International Tax and Investment Center.

The report, commissioned by Philip Morris International, was designed to measure the consumption of illicit cigarettes—those products sold on the domestic market without the correct taxes having been paid on them—in the Philippines and its impact on revenue losses for the government.

“Because of illicit tobacco trade, the government is losing over PHP15 billion it should have been collecting from tobacco excise tax,” Adrian Cooper, chief executive officer at Oxford Economics, said in a briefing yesterday in Makati.

“While the administration can be pleased they have achieved a 114 percent increase in tobacco excise revenue in 2013 as a result of the new tax regime, one cannot ignore the tax foregone as a result of this very rapid growth in the illicit cigarette trade, with domestic illicit cigarettes making up the lion’s share of this.”

The report found that 19.1 billion illicit cigarettes were consumed in the country last year, almost three times the estimated 6.4 billion consumed in 2012.