Study Finds Enforcement Gaps Drive Philippine Illicit Trade

A recent independent study ¹ has challenged tobacco industry claims that high tobacco taxes are driving illicit cigarette trade in the Philippines, concluding instead that enforcement gaps and regional factors are the primary causes of illicit market activity.

The findings come as legislators representing tobacco-growing regions continue to push for reductions in planned excise tax increases on tobacco and vaping products, arguing that current tax levels are encouraging smuggling, reducing government revenues and contributing to a resurgence in smoking.

The research, conducted by Economics for Health (EfH) and Action for Economic Reforms (AER), examined illicit cigarette sales across eight Philippine cities and found significant regional differences in illicit trade prevalence despite the application of uniform national tobacco tax rates.

Wide regional variations

The study combined a survey of 1,100 small neighbourhood retailers (sari-sari stores) with an audit of 7,542 discarded cigarette packs collected from 326 stores between May and June 2024.