Gatchalian calls illicit tobacco, vape trade `devil in our country’
Senator Sherwin Gatchalian, chair of the Senate Ways and Means Committee.
MANILA, Philippines — Senator Sherwin Gatchalian issued a scathing warning on Monday about the worsening illicit tobacco trade crisis in the Philippines, calling it “the devil in our country” as he led calls for tougher enforcement, stronger prosecution, and the creation of a full-time task force to combat the problem.
“Illicit trade is creating lots of problems in our country in terms of revenue collection and health,” Committee chair Gatchalian said during a Senate Ways and Means hearing on the proposed excise tax on tobacco products.
Gatchalian stressed the urgency of acting decisively as it was revealed during the proceedings that 70-80% of vape products in the market are illicit.
READ: Asean countries asked to work together to stop illicit tobacco trade
“We demand more aggressive enforcement because the numbers are showing the uptick of vaping use among the youth is entering a very dangerous stage. And if the products are not even registered, eh di mas dangerous ‘yun kasi hindi natin alam kung ano ang laman,” he said.
The senator’s frustration echoes growing concerns from other stakeholders that while enforcement operations are ramping up, prosecution remains lacking.
Government data reveals that out of the Bureau of Customs’ (BOC) 1,296 enforcement actions against illicit traders, only two have led to prosecution. The Bureau of Internal Revenue (BIR), meanwhile, has conducted 1,785 enforcement operations but has only secured one prosecution.
“So in other words, there’s no certainty of prosecution. If there’s no certainty of prosecution, people will not be afraid of getting penalized or being imposed with penalties when they smuggle cigarettes in our country,” Gatchalian lamented.
Regulatory bodies
He also demanded “credible, feasible, effective” action from regulatory bodies. “We want action already from the BIR and the Department of Trade and Industry (DTI). Ito yung papatay sa mga bata,” he said, referring to the rise of illegal vape products that appeal to the youth.
Gatchalian advocated for the establishment of a full-time inter-agency task to address the problem of illicit trade, saying such a task force must be equipped with dedicated funding and resources.
He highlighted that enforcement bodies need proper funding and incentives to do their jobs effectively. He suggested allocating specific funds in the national budget to support operations and to incentivize agencies to strengthen enforcement.
The senator also put retailers of smuggled products on blame, saying they are complicit in exposing Filipino youth to harmful and often unregulated products.
READ: BIR targets illicit vape traders, charges to come in Q1 2025
Global illicit trade consultant Rohan Pike, who spent over two decades in the Australian Federal Police, warned against adopting overly punitive approaches to tobacco and vape regulation. Speaking at the hearing, Pike praised the country’s willingness to address illicit trade but cautioned that Australia’s experience shows high taxes and bans can fuel, rather than curb, organized crime.
“Australia’s failed policy has seen illicit cigarette sales surge to over 40%, and illicit vape sales exceed 95%,” Pike said. “If you think 80% is bad here, we (Australia) can beat that.”
He noted that despite massive law enforcement investments, seizures have not disrupted criminal networks. “Seizure rates are not a sign of success. They only show how much is out there — not whether we’re dismantling syndicates.”
Violent consequences
Pike also warned of the violent consequences of a booming black market. “There have been homicides, kidnappings, extortion, and armed robberies — all driven by the high value of smuggled products.” He urged Philippine lawmakers to learn from Australia’s mistakes and balance enforcement, taxation, and public health goals to avoid empowering criminal syndicates.
In February, Congress approved House Bill 11360 seeking to curb the rampant illicit trade in tobacco and vape products by adjusting excise tax rates. The bill proposes a structured schedule of tax increases, with excise rates rising by 2% every even-numbered year starting January 1, 2026, and by 4% every odd-numbered year beginning January 1, 2027, until December 31, 2035. It also proposed a unified tax rate for nicotine salt and freebase vapor products.
Illicit vape products continue to flood the market, with the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR) seizing over P5 billion worth of unregistered vapes in early 2025.
The surge is largely attributed to a tax structure that encourages misdeclaration, as freebase nicotine is taxed at just P6.62 per milliliter, while nicotine salt is levied at a significantly higher rate of P57.30 per milliliter.
While industry groups including the Philippine E-Cigarette Industry Association (PECIA) expressed support for a unified tax rate at reasonable levels, they firmly opposed a proposed tax on vape devices as taxes are already imposed on the consumables.
