According to a report from Bworld Online on October 20, the Philippines Bureau of Internal Revenue (BIR) will not be able to meet its consumption tax revenue target of 362.2 billion Philippine pesos (approximately 6.3 billion US dollars) this year due to a decrease in demand for tobacco products.
BIR Assistant Commissioner Jethro Sabariaga has stated that tobacco consumption tax accounts for over 40% of national consumption tax revenue. However, tobacco consumption has been steadily decreasing over the past decade.
Nowadays, it is rare to see someone smoking, and this shift in market demand can be felt intuitively.
He also added that the tax revenue growth from other taxable goods cannot make up for the decline in tobacco consumption tax.
Consumers switching to e-cigarette products has also affected government tax revenues. According to the commissioner, the consumption tax on one e-cigarette is equivalent to the tax on one pack of cigarettes, but e-cigarettes are often consumed more slowly.
A smoker who switches to e-cigarettes, typically someone who consumes 10 to 15 packs of cigarettes a month, may only purchase one e-cigarette product, or even worse, may only buy one every two months.
Previously, Bureau of Internal Revenue (BIR) Director Romeo D. Lumagui pointed out that illegal tobacco trade has also posed challenges for authorities in collecting consumption taxes. In the first half of 2024, the agency lost approximately 7.2 billion Philippine pesos (1.2 billion USD) in potential revenue due to seized tobacco and e-cigarette products.
As of the end of August, BIR collected 194.93 billion pesos (34 billion US dollars) in consumption taxes, with tobacco product revenue accounting for 844.2 billion pesos (15 billion US dollars), or 43.31% of the total consumption tax collected.
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