Mindanao has emerged as a hotspot for illicit tobacco trade, with the smuggling and sale of untaxed cigarettes having reached alarming levels in the cities of Zamboanga and General Santos, according to a new study by the Action for Economic Reforms. The study found that illicit cigarette sales in Zamboanga had reached 79.5 percent of all packs sold, while General Santos was at 38.5 percent, far exceeding the rates observed in Luzon and Visayas. The elevated levels of illicit trade in Mindanao were driven largely by the smuggling of unregistered foreign cigarette brands and weak local enforcement. In Zamboanga, nearly half of all collected cigarette packs were found to be unregistered, while in General Santos, unregistered brands made up 58.6 percent of all packs examined. The study’s findings disprove the tobacco industry’s narrative that high taxes cause smuggling, instead highlighting weak law enforcement and regulatory oversight as the main issues. The most common unregistered brands circulating in the two cities were Cannon Menthol 100s and Fort Menthol 100s, which lacked tax stamps and graphic health warnings. Other illicit brands were traced to Indonesia, Thailand, the United Arab Emirates, and the United Kingdom. The study also found widespread pricing violations, with 80.2 percent of all cigarette packs sold below the Bureau of Internal Revenue’s floor price in Zamboanga, and 49.3 percent in General Santos. The Action for Economic Reforms attributed the proliferation of illicit cigarettes in Mindanao to historical and institutional weaknesses, including weak customs monitoring and enforcement, inadequate logistics, and erratic border controls. The group recommended strengthening retail-level regulation, upgrading the tax stamp system, and empowering the Bureau of Internal Revenue to suspend or close stores caught selling illicit cigarettes. The proliferation of illicit tobacco undermines not only public health but also the government’s revenue collection, with the country estimated to lose around P52 billion annually in foregone revenues due to the illicit tobacco trade.
