Study: Govt loses P13.2B/yr to smuggling of 'sin products'

A recent study by the Philippine government has showed that the country loses at least P13.2 billion in potential revenues every year to technical smuggling of products like tobacco and alcohol. The study, which was commissioned by the Department of Finance showed that foregone revenues from technical smuggling of sin products reached P52 billion from 2000 to 2005. The study revealed that the revenue losses consisted of about P2.8 billion in tariff losses, P36.9 billion in excise tax losses and P11.1 billion in value-added tax losses. Top revenue leakages during the period covered by the study were in spirits (P22.3 billion) cigar and cigarettes (P20.5 billion) and wines (P6.1 billion). The study aimed to determine how much the government has lost to technical smuggling, with a special focus on heavily excisable "sin products." According to the study, shipments from Hong Kong and Singapore consistently showed extremely high leakage rates and large absolute amounts in discrepancies of about $400 million (approx. P19.6 billion) per year. Malaysia, Australia, China and Macau, also had significant leakage rates, although the leakage from these countries amounted to only 10 percent of the losses from Hong Kong and Singapore. On a per product basis, the study said losses were most significant for tobacco and cigarettes-- 80 percent for Hong Kong and Singapore-- together account for 75 percent of total leakages.-GMANews.TV