SEN. Joseph Victor Ejercito is against the passage of a measure that seeks to lower taxes on cigarettes, heated tobacco products, and vape products.
In a statement last Saturday, Ejercito said House Bill No. 11360, passed by the House of Representatives last February, runs counter to the purpose of the Universal Health Care Law — a measure which seeks to “defend every policy that protects public health and secures the future of our healthcare system.”
Ejercito was the principal author of the UHC Law.
“That’s why I fully support the position of Sen. Sherwin Gatchalian, chairperson of the Senate Committee on Ways and Means, of his opposition to the proposal to lower anew the taxes on cigarettes, tobacco, heated tobacco products, and vape. Like him, I am strongly against House Bill No. 11360,” Ejercito said.
In 2019, Ejercito was one of the lawmakers who led the campaign to increase taxes on cigarettes and vapes for two reasons: to provide funds for the UHC and decrease the number of Filipinos who are into smoking and vaping since the high prices of these products will discourage people from buying them.
“If we lower these taxes now, we risk undoing the progress we’ve already made. According to health experts, the number of tobacco users in the country may increase to more than 500,000 by the year 2030. Aside from that, funds intended for Universal Health Care will also decrease,” he added.
Gatchalian earlier said that he will no longer tackle the provisions related to cigarettes in HB No. 11360.
“Lowering taxes won’t curb illicit trade, stronger enforcement will…As long as I’m the chairman of this committee, I will not agree to include that cigarette provision in the bicam report,” Gatchalian said.
He said the committee will now focus on taxation that deals with vaping products and the problems of smuggling.
The Bureau of Internal Revenue (BIR) has called for higher taxes on vapor products, warning that taxing them less than cigarettes would lead to significant revenue losses for the government.
“But with regard to the vapor products, we share the same observation with the Department of Finance that it should not be lower than traditional tobacco. But, in fact, [we] proposed that it should be higher because one vapor product is not the same as the consumption of one pack of cigarettes,” said BIR Large Taxpayers Service Assistant Commissioner Atty. Jethro Sabariaga during the Senate hearing last week.
Sabriaga said: “One pack of cigarettes can be consumed in 300 puffs. The market shows that the lowest number of puffs you can consume on one vape product is 600 puffs, as per the representation and their labelling. So, there’s a non-parity… from a revenue perspective, the revenue agency will be or the government will be losing a lot based on the consumption of these products.”
Sabariaga also stressed the consequences of reduced tax rates for vape products.
“From a revenue perspective, the government will be losing a lot based on the consumption of these products because these products will be consumed (for] a longer time than one cigarette product,” he said.
The DOF echoed a similar position, with DOF Director Maria Carla Espinosa saying that “the DOF indeed supports a unitary specific tax rate for all vapor products. This is to improve efficiency in tax collections and to encourage an increase in tax compliance.”
Gatchalian said it is time to raise taxes on vape products, especially given the public health threats posed by vapes.
“Because of the huge difference between nicotine salt as well as freebase products, we are seeing technical smuggling happening in our country because it is very cheap. Or it’s cheaper to import freebase, almost ten times cheaper,” he said.
“We have seen an increase and an uptick of vape products by the younger group, or the younger segment of our population, particularly the adolescents. That’s why part of our recommendations is to impose a single tax rate on vapor products, meaning freebase and nicotine salt. And also impose ad valorem tax on vaping devices. This is a global practice,” he added.
The BIR has reported higher collections from vape products following tighter enforcement using its stamp system. In 2023, only 11.2 million milliliters of vape liquids were taxed, resulting in P223.75 million in excise taxes. But after the implementation of the BIR’s vape stamp system in June 2024, collections jumped to P942 million from 130 million in just one year.
