Key Points:
1.The Philippine government is considering imposing higher taxes on e-cigarette products in order to deter the use of e-cigarettes among young people.
2.According to the data, the usage rate of e-cigarettes among teenagers has reached 40% in 2023, significantly higher than the 7.5% rate in 2021.
3.Senator Sherwin Gatchalian emphasized the need for strict enforcement to prevent illegal e-cigarette trade.
According to The Philippine Star on May 30th, the Philippine government is considering imposing higher taxes on e-cigarette products compared to traditional cigarettes, especially due to the increasing prevalence of e-cigarette use among teenagers.
During a hearing at the Senate Ways and Means Committee, Jethro Sabariaga, Assistant Commissioner of the Bureau of Internal Revenue in the Philippines, stated that cigarettes and heated tobacco products should be taxed at the same rate, but e-cigarette products should be handled differently and subject to a higher tax rate.
Sabarija pointed out that the average usage of a pack of cigarettes is 300 puffs, while the minimum usage of an e-cigarette can reach up to 600 puffs. Prolonged use of e-cigarettes will result in more serious tax revenue losses for the government. He stated that higher taxes can raise the prices of e-cigarette products, thereby deterring the purchasing desire of the younger generation.
Sherwin Gatchalian, Chairman of the Senate Committee, mentioned that the usage rate of e-cigarettes among teenagers has risen from 7.5% in 2021 to 40% in 2023. This rapid growth trend is concerning, especially in the absence of a full understanding of the ingredients in e-cigarettes.
To combat the proliferation of e-cigarette products, especially illegal ones, the National Tax Agency will implement a tax stamp system starting in 2024. Failure to affix a stamp will indicate that the product has not paid the necessary consumption tax, leading to confiscation and potential tax evasion charges. Prior to the implementation of the stamp system in 2023, only 11.2 million milliliters of e-cigarette products were imported and taxed, but by 2024, this number skyrocketed to 130.5 million milliliters.
Meanwhile, the Philippine Senate is discussing revisions to the tobacco product excise tax in order to combat the increasing problem of illegal trade. A proposal in the House of Representatives suggests reducing the annual 5% increase in the tobacco consumption tax rate, but Gatchalian stated that lowering the tax rate will not effectively address illegal trade; enforcement is the key focus.
During the meeting, Philip Morris International (PMI) proposed that the government should rationalize existing tax rates, as their inefficiency has resulted in a decrease in government revenue.
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