THE Bureau of Internal Revenue (BIR) said it collected P130.91 billion in tobacco excise taxes in the first 11 months of 2024, well behind the pace needed to hit the year’s target of P185.34 billion.
BIR Commissioner Romeo D. Lumagui, Jr. said at a hearing at the House of Representatives that consumption patterns for tobacco are changing, with users shifting away from cigarettes in favor of heated tobacco products and vapor products. He also cited the proliferation of products that evade tax, including smuggled cigarettes.
The Department of Science and Technology Food and Nutrition Research Institute said 10 to 19-year-olds currently smoking grew by 4.8% in 2023.
In the same House briefing, the Ways and Means committee heard proposals for a 20% ad valorem tax on vape units.
Currently, the Philippines charges an excise tax of P60 per pack of 20 cigarettes while vape products are levied a P54.60 per milliliter (mL) tax for salt nicotine and P63 per 10 mL tax for classic nicotine products, according to the excise tax rates prescribed by the Bureau of Customs for 2024.
“In principle, we are actually supportive of the unitary rate, particularly in the vapor products for ease of tax and be able to hit our health goals,” Finance Assistant Secretary Karlo Fermin S. Adriano said.
“However, we would like to note that we are still studying the optimal rate because as you know right now for salt nicotine it was P54.60 per mL last year but for the free-base per 2024 to P63 per mL,” he added.
Meanwhile, Philippine Tobacco Institute (PTI) President Jericho B. Nograles said the organization is not in favor of the proposed 20% ad valorem tax on vape devices “as it was already covered in the 12% value-added tax.”
To deter the illicit trade in tobacco products, the PTI proposed that the current tax system be revisited to “determine the optimal tax rate that will allow the government to achieve its twin objectives of raising revenue and discouraging consumption of tobacco products without any unintended consequences.”
Mr. Nograles added that a single rate will be crucial for all vapor products.
The unnumbered substitute bill to House Bill No. 10329, which deals with the illicit tobacco trade, proposes a 5% increase in the tax rate for vapor products starting Jan. 1, 2027. — Aubrey Rose A. Inosante
