SEN. Sherwin Gatchalian yesterday said that he asked Senate President Francis Escudero to prioritize the passage of two of his measures once Congress resumes regular sessions on June 2.
Gatchalian said he requested that the passage of the total ban of Philippine Offshore Gaming Operators, and an increase in the taxation of vape products be included in priority measures to be passed in the remaining six session days of the 19th Congress.
Congress resumes regular sessions on June 2 and will go on a sine die adjournment starting June 14 after a long break for the midterm elections.
The Senate will actually have six session days left from June 2 to 13, since the sessions are only held Mondays to Wednesdays.
Gatchalian, in an interview with radio dzBB, said the bill to ban POGOs is now in the plenary, adding he feels it will have a smooth passage since no one among the senators has opposed it.
He was referring to Senate Bill No. 2868 or the Proposed Anti-POGO Act of 2024, which seeks to institutionalize the ban on POGOs by eliminating “once of for all the operations” which extend “beyond the current administration.”
“Nasa floor na ‘yan at lahat naman ay sumasangayon. Mayroon nang executive order sa pag-ban ng POGO. So, gagawin na lang batas para talagang bawal na ang POGO sa bansa (It has already reached the Senate plenary and everyone is in favor of it. There is already an executive order banning POGOs, so it will just have to be passed into a law so that POGOs will be totally banned in the country),” he said.
Gatchalian said he also requested Escudero to prioritize the passage of the increased taxation on vape products to discourage the public, especially the youth, from using them.
“Gusto ko ma-approve it, ‘yung itaas sana ang buwis ng vape dahil nakita namin ang daming bata nagve-vape ngayon. Hindi nga sila nagsi-sigarilyo, pumasok naman sa vape (I also want this to be approved, the increase in taxation on vape products, because data showed that there is a big number of youths who are into vaping. It’s good that they are not into smoking cigarettes, but sadly they are into vaping),” he said.
He said there is also technical smuggling in vape products since the freebase and nicotine salt used in vape products have different tax rates.
“Kaya kung alin ang mas mababa ay ‘yun ang dini-declare nila. At least sa akin, on my end, ito ‘yung mga gusto kong matapos sa nalalabing six session days (That’s why they declare which ever has lower value. At for my part, these are the bills that I want to be passed in the six remaining session days),” he added.
Economists and industry groups are pushing for tax rationalization to reduce the price gap between legal and illicit cigarettes and vape products.
Illicit products are cheaper due to the price difference between taxed and untaxed cigarettes. Economists blamed the wide price difference on steady increases in excise taxes, which have driven Filipino nicotine consumers toward illicit products.
Economist Bienvenido Oplas Jr. said a lower tax rate could narrow this gap, reducing the incentive for consumers to switch to smuggled or illicit items.
Oplas said the current tax rate has likely surpassed the revenue-maximizing point, noting that tobacco tax revenue peaked at P176 billion in 2021 with a P50 per pack tax rate, adding that subsequent increases led to declines.
They contend that the current tax structure on tobacco and vapor products in the Philippines is misaligned with market behavior, penalizing legitimate businesses and incentivizing smugglers.
At the same time, they proposed a more rationalized excise tax framework to address the problem and significantly curb the expanding illegal trade.
The existing misalignment has resulted in stagnant excise revenues as the illicit trade in cigarettes and vapes grows.
The Philippine Tobacco Institute (PTI) said reforming the existing tax system would effectively curb illegal commerce, boost government revenue and restore the intended impact of the Sin Tax Law.
PTI president Jericho Nograles said the government’s annual tax hike policy aimed at reducing smoking has “failed” and led to the open sale of illicit products to minors and widespread online distribution with limited regulation.
The PTI called for a recalibration of tax rates, noting that illegal tobacco incidence reached a record 18.2 percent in 2024.
Industry groups warned that the current tax structure is fueling the illicit trade in cigarettes and alternative products, jeopardizing government finances and public health.
Economists suggest the Philippines has likely passed the revenue-maximizing point on the Laffer Curve, where higher taxes lead to reduced revenue.
Dr. Arthur Laffer said that applying the Laffer Curve demonstrates that excessive tax rate increases can decrease revenue by incentivizing tax evasion and the growth of the illicit market, suggesting that the Philippine tobacco excise tax rate has reached a “prohibitive range.”
Excessively high taxes act as a de facto prohibition, pushing consumers toward cheaper, illegal alternatives, undermining public health goals and harming legitimate businesses.
Bureau of Internal Revenue (BIR) data show that 2023 tobacco excise tax collections reached only P134 billion, nearly P51 billion below the target. Despite higher taxes, revenue is declining as legal sales plummet, primarily because consumers are switching to untaxed illicit products rather than quitting.
