Consumer Choice Philippines.
MANILA, Philippines 鈥� The illicit tobacco trade in the Philippines is not only depriving the government of billions in much-needed revenue but also worsening the country鈥檚 public health crisis by exposing consumers to cheaper products that are highly toxic and unregulated.
Experts and advocacy groups warn that the spread of counterfeit and smuggled tobacco products in the Philippine market undermines public health efforts, increases health risks, and impedes smokers鈥� attempts to quit. Illicit cigarettes and vapor products鈥攕old cheaply and often devoid of health warnings and quality controls鈥攔emain widely available despite existing regulations.
A study published in the Canadian Medical Association Journal found that access to untaxed or contraband cigarettes undermines smokers鈥� attempts to quit by providing a cheaper alternative and increasing the likelihood of relapse or continuous use.
搁贰础顿:听BIR sues vape firms for nonpayment of P8.68B in taxes
The same trend has been observed locally, where many illicit cigarettes are sold for less than half the price of legal brands.
Consumer advocacy group Consumer Choice Philippines also pointed to the link between illicit trade and stalled progress in reducing smoking rates. 鈥淐heap illicit cigarettes undermine government strategies like sin taxes, which were designed to curb smoking. If smokers can still access low-cost alternatives, the public health objective is lost,鈥� said Adolph Ilas, the group鈥檚 Chairman.
Although Philippine law prohibits the sale of tobacco to minors, illicit cigarette and vape traders circumvent these regulations by operating through informal channels such as street vendors and unscrupulous online sellers.
Vape trade
Illicit vape trade has also emerged as a major revenue drain for the government. According to BIR data cited by the OSSTG Ways and Means Committee, misdeclaration and smuggling of vape products are projected to cause a 鈧�62.52 billion shortfall in excise tax collections. In early 2025 alone, more than P5 billion worth of illicit vapes were seized.
In the Philippines, smoking rates have resurged after nearly a decade of decline. Citing government data during the sponsorship hearing of House Bill 11360, Nueva Ecija Rep. Mikaela Suansing noted that adult smoking prevalence rose from 18.5% in 2021 to 23.2% in 2023. The increase is largely attributed to the availability of cheaper, illicit tobacco products that have flooded the market in recent years.
Findings from several international studies highlight that illicit tobacco products contain significantly higher levels of harmful substances. A study published by the US Center for Disease Control and Prevention (CDC) showed that counterfeit cigarettes contain elevated amounts of cadmium, lead, and thallium. These metals are linked to cancer, kidney damage, and other serious illnesses.
Globally, estimates show that 14鈥�15 percent of all tobacco products consumed annually are illicit, accounting for nearly 500 billion cigarettes. These products are typically smuggled and manufactured without compliance with regulatory standards, making them cheaper and more accessible to low-income consumers and the youth.
The International Chamber of Commerce (ICC) Counterfeit Intelligence Bureau likewise reported that seized counterfeit cigarettes contained up to five times more cadmium, six times more lead, 160 percent more tar, and 133 percent more carbon monoxide compared to legal brands. Some samples were even found to contain unsanitary contaminants such as insect eggs, mold, and human feces.
鈥淚llicit tobacco products are far more dangerous than legal ones because they are not manufactured under any form of safety oversight. Filipinos are being exposed to unknown and potentially deadly substances,鈥� said Dr. Lorenzo Mata, president of Quit for Good, a health advocacy group promoting tobacco harm reduction. 鈥淭he failure to curb illicit tobacco trade means more Filipinos are exposed to even deadlier products.鈥�
Sin Tax Law
Suansing also highlighted that while the Sin Tax Law initially led to higher revenues and lower smoking rates, excise tax collections have been steadily declining since 2021. She pointed out that excise tax revenues dropped from P176 billion in 2021 to P160 billion in 2022, and further declined to P135 billion in 2023.
搁贰础顿:听BIR sues vape firms for nonpayment of P8.68B in taxes
Suansing warned that the twin trends of declining revenues and rising consumption reflect the urgent need to curb illicit trade, which is undermining the very purpose of tobacco taxation as a public health and fiscal tool.
The trend has continued into 2024. In a recent Senate Committee on Ways and Means hearing, the Bureau of Internal Revenue (BIR) reported that collections fell further to P134 billion, down from P174 billion in 2021.
Senate Ways and Means Committee Chairman Sherwin Gatchalian revealed during the same hearing that in 2024, tax leakages from illicit cigarette trade reached P342 million, while those from illegal vapor products amounted to P64 million.
In response, the BIR has ramped up enforcement activities targeting illicit cigarettes and vapor products. In 2023 alone, the agency conducted 141 operations against illegal vape sales.
The Bureau of Customs (BOC) also intensified its anti-smuggling initiatives. According to Assistant Commissioner Vincent Maronilla, Customs seized 318 shipments of illicit products in 2024, with a total estimated value of P9.19 billion鈥攎ore than five times the P1.71 billion worth of seizures from 131 operations in 2021.