A proposal to impose a floor price on alternative tobacco products may result in an unwarranted increase in the prices of e-cigarettes and vapor products, thus encouraging a spike in combustible cigarette consumption.
In a statement, the Philippine E-Cigarette Industry Association (PECIA) also warned this plan would embolden black market traders of vapor products brought in and sold via illicit channels.
The group, composed of around 200 active members that comprise major players in the local e-cigarette market, recently participated in the online consultation conducted by Bureau of Internal Revenue implementing rules and regulations (IRR) covering the provisions of Republic Act Nos. 11346 and 11467. These laws govern the increase in excise tax on alcohol, tobacco products, heated tobacco products, and vapor products.
PECIA also noted the proposed production cost formula in the IRR is too high and is unrealistic in the Philippine setting but did not provide figures.
“The international market data used are on the high side, and PECIA has provided our inputs on more relevant numbers for the Philippines. Production cost, which is a component of the minimum price formula, needs to take into account multiple factors such as country of production, logistics considerations, cost of ingredients, cost of quality, and so forth,” PECIA said.
It added excise taxes and value-added tax, which cover the social cost of these products, are factored into the cost of vapor products.
“Imposing a floor price—wherein the current selling price of vapor products will more than double, rendering them practically unsellable—will inadvertently work against the government’s tobacco harm reduction mission, which the PECIA fully supports,” the group said.
Ultimately, higher prices can and will discourage adult Filipino smokers from making the switch to vapor products, it added.