Revenues from e-cigarette hinge on scope of ban

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    The Department of Finance (DOF) said it is still waiting for the issuance of an executive order (EO) on the vaping ban ordered by the President before it can come up with an updated revenue estimate for the proposed excise tax increases.

    “Basically, we’re waiting for the EO to clarify the scope of the regulation,” Karl Kendrick Chua, DOF undersecretary, said in a press briefing on the sidelines of the Sulong Pilipinas consultative workshop held at the University of Santo Tomas in Manila last Friday.

    Senate Bill 1074, or the act increasing the excise tax on alcohol products, heated tobacco products (HTPs) and vapor products, aims to align the tax rate of HTPs and vape with traditional cigarettes at P45 beginning next year, P50 in 2021, P55 in 2022 and P60 in 2023, with five percent annual increases from 2024 onwards.

    Both the House and Senate versions of the proposal also ban flavors other than mint, menthol and tobacco for electronic nicotine delivery systems and electronic non-nicotine delivery systems, in an effort to discourage consumption among young people.

    “Our position has always been to make sure that the flavors appealing to the youth are not allowed but the rest, I think, should be taxed and that is certified as urgent,” Chua said.

    President Duterte however has ordered a nationwide vaping ban, after the Department of Health reported that a 16-year-old girl from the Visayas is the first local casualty of vape-associated lung injury.

    Asked how the ban will affect the projected revenue to be collected should the proposed excise tax increase be passed into law, Chua reiterated the need to wait for the EO.

    “We’ll wait for the EO to let us know the scope of the regulation, then from there we’ll update it (the figures),” Chua said.

    “With the Senate version, (the current projected revenue for the entire proposal is) P47 billion whereabouts. The e-cigarettes (accounts for) around P2 billion,” he added.

    Antonio Joselito Lambino, DOF assistant secretary, also said during the same event should the ban have an impact on the projected revenue, it could be around P1 billion to P3 billion on the first year of implementation. However, he also said it really depends on the scope and provisions stated in the President’s EO.