xAnts

MANILA, Philippines – A prominent international security expert is sounding the alarm, warning Philippine legislators that aggressively increasing taxes on cigarettes and vapes could inadvertently backfire. Instead of curbing consumption and generating revenue, such measures risk significantly boosting the already thriving black market, posing serious economic and public health threats to the nation.

Speaking before lawmakers, the expert highlighted the potential for a surge in illicit trade. “When taxes become excessively high, it creates a lucrative opportunity for smugglers and counterfeiters,” they explained. “These operators don’t pay taxes, allowing them to undercut legitimate businesses and flood the market with cheaper, often unregulated, products.”

The Philippines has been grappling with a persistent problem of illicit tobacco and vape products. These unregulated goods often contain harmful ingredients and lack proper health warnings, posing a significant risk to consumers, particularly young people. A thriving black market not only undermines government revenue but also jeopardizes public health and national security.

The Ripple Effect: Beyond Revenue

The expert cautioned that the negative consequences extend beyond lost tax revenue. A booming black market could also lead to:

• Increased Crime: The illicit trade often involves organized crime syndicates, fueling other criminal activities.
• Damage to Legitimate Businesses: Legal manufacturers and retailers will struggle to compete with the lower prices of black market goods, potentially leading to job losses and business closures.
• Weakened Regulatory Framework: A widespread black market makes it harder for authorities to enforce regulations and protect public health.
• Reduced Consumer Protection: Consumers are exposed to potentially dangerous, unregulated products with no recourse for harm.

A Balanced Approach: Recommendations for Lawmakers

Instead of simply raising taxes, the expert advocated for a more comprehensive and balanced approach that includes:

• Strengthening Border Controls: Enhanced surveillance and enforcement to prevent the smuggling of illicit products.
• Improving Tax Administration: Streamlining tax collection processes and cracking down on tax evasion.
• Public Awareness Campaigns: Educating the public about the dangers of illicit products and the importance of supporting legal businesses.
• Collaboration with Stakeholders: Working with manufacturers, retailers, and law enforcement agencies to combat the black market.
• Consideration of Alternative Policies: Exploring strategies such as tiered tax structures and targeted enforcement against counterfeiters.

The warning comes at a critical time as the Philippine government considers further tax increases on tobacco and vape products. Lawmakers are urged to carefully weigh the potential risks and benefits of such measures and prioritize a strategy that effectively combats the black market while protecting public health and supporting the economy.

Ultimately, a sustainable solution requires a multi-faceted approach that addresses the root causes of the black market and ensures a level playing field for legitimate businesses.