ILLICIT TOBACCO BUSINESSES ON THE RISE

Illicit activities in the tobacco business have been on the rise since ECQ was declared in March with 171 enforcements last year, compared to 114 in 2019.

A total of 161 machines were seized from illegal factories, double the 82 machines seized in 2019. These machines can form 24 lines, with each line estimated to produce as much as 3 million sticks per day.

The industry’s volume is estimated to have declined by 12% in 2020 due to the end-Aug 2019 and October to November 2020 price increases to pass on the additional excise taxes, coupled with the impact of the enhanced community quarantine (ECQ) implemented in Luzon starting March 17 and in other select cities thereafter up to end-May 2020, as well as the reinstatement of the Modified ECQ in NCR and select provinces for two weeks in August 2020. PMFTC’s volume was 16% lower year-on-year in 2020.

President Duterte signed Republic Act (RA) 11346 in July 2019 which increased further the excise tax on tobacco starting January 2020. From Php35 per pack in 2019, it increased to Php45 per pack in 2020, and will increase by Php5 per pack annually from 2021 to 2023, then increase by 5% annually thereafter.

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