THE RISE in cigarette smuggling in the face of higher tobacco taxes imposed at the start of the year may be helping finance terrorism, the Department of Finance (DoF) said, raising the stakes for officials tasked with cracking down on smuggling.
“Illegal money can end up funding terrorist activities,” Finance Secretary Carlos G. Dominguez said Thursday, without providing details of a definite link to terrorist groups. He added that the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) have formed a team to streamline the sharing of information and strengthen coordination in running after smugglers and counterfeiters.
Customs Commissioner Caesar R. Dulay has said that smuggled cigarettes are currently flooding the market.
Mr. Dominguez said the increase in smuggling was expected after Mighty Corp. was caught using counterfeit tax stamps, and the threat of prosecution led to the company’s sale to Japan Tobacco International.
“We took out one of the big players. Of course nature abhors a vacuum. If there’s an opportunity… Filipinos have a lot of misplaced entrepreneurship,” Mr. Dominguez told reporters on Thursday.
“We are really cracking down,” he added.
Mr. Dominguez noted that the group that carried out the Marawi siege were funded by drug money.
“The origin of the Maute group was drugs, drug money, that’s why they had so many bullets — three months’ worth of bullets. The proceeds of illegal activities don’t always just end up in people’s pockets, not like before,” he said.
On April 10, the BoC seized P18.5 million worth of smuggled cigarettes from China with brands including Jackpot, Fortune, John, Marvels, and U2.
The BIR and the Philippine Drug Enforcement Agency also conducted separate raids on April 17, 19, and 20 in Malabon and Manila where they found P80 million worth of smuggled and counterfeit cigarettes.
One warehouse in Malabon was also using the tobacco business as a front for operating a meth lab.
“The BIR and BoC are working very closely together. It’s something that you have to anticipate when you increase the cost,” Mr. Dominguez said.
Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act (TRAIN) imposes a P32.5 excise tax per cigarette pack starting this year, from 2017’s P30 per pack. By 2022, this will increase gradually to P40.
However, taxes on tobacco products are expected to increase further as the Finance department said that it will support Senator Emmanuel “Manny” D. Pacquiao’s bill that slaps a P60 tax per pack on cigarettes.
“It’s the right thing to do. Just because you’re going to get a bad reaction, that doesn’t mean you’re going to stop,” Mr. Dominguez said. — Elijah Joseph C. Tubayan