The Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR) flagged a supposed lack of funding to strengthen law enforcement efforts against cigarette smuggling, according to the Department of Finance (DOF).
During a House of Representatives ways and means committee hearing on Tuesday, DOF Fiscal Policy and Monitoring Undersecretary Karlo Fermin Adriano said the BOC and BIR had submitted reports to the department detailing what their respective bureaus needed for the campaign.
This was in response to a question from FPJ Panday Bayanihan party-list Rep. Brian Poe, who is also a vice chairperson of the House appropriations committee.
Adriano enumerated the following concerns raised by the BOC:
Insufficient funds hindered the implementation of the compulsory acquisition provisions of CMTA (Customs Modernization and Tariff Act or Republic Act No. 10863) to counter undervalued shipments;
Insufficient funds for the acquisition of land, air and water assets to combat bulk smuggling in the high seas within the territorial waters of the Philippines;
Lack of legal support for BOC personnel while in the line of duty, testifying against personalities involved in smuggling; and
The full implementation of the National Single Window system.
Compulsory acquisition provisions refers to Section 709 of the CMTA, which allows the BOC to ‘acquire imported goods under question for a price equal to their declared customs value plus any duties already paid on the goods.’
The provision sought to ‘protect government revenues against undervaluation of goods.’
Further, the National Single Window system stores standardized information on imports, exports and transit on a secure electronic platform.
Meanwhile, according to Adriano, the BIR only reported ‘insufficient funds to hire personnel, acquisition of assets and/or machinery to conduct nationwide raids on illicit trade of tobacco products.’
The DOF undersecretary also told Poe that they will ask the BOC and the BIR to provide additional information as to how much more funds they need.
‘For this type of smuggling, it’s really a function of tax enforcement,’ Adriano explained.
He cited a study, which surveyed sari-sari stores and audited empty cigarette packs, finding that illicit tobacco trade in Mindanao was higher compared to Luzon despite the Philippines having only one excise tax rate for that type of products.
Adriano further cited a study in which illicit tobacco trade in Malaysia jumped from 40 percent in 2015; to 50 percent in 2025 after the latter’s government doubled the excise tax on the products.
‘That’s why we’re going to recommend nga, if we’re gonna have some reform in tobacco [taxation], we would like to include administrative reforms,’ he stressed.