DOF awaits EO banning imports of e-cigarettes

MANILA, Philippines — The Department of Finance (DOF) is waiting for Malacanang’s executive order (EO) to determine the impact of President Duterte’s ban on the importation and use of vapes and electronic cigarettes in public places.

In a press briefing, Finance Undersecretary Karl Kendrick Chua said the EO will set the scope of Duterte’s new policy and enable the DOF to estimate its impact on the expected revenues under Package 2 Plus of the Comprehensive Tax Reform Program (CTRP).  

“We’ll wait for the EO to let us know what is the scope of the regulation, of the ban. Then from there, we’ll update (our revenue estimates),” Chua said on the sidelines of the Sulong Pilipinas consultative workshop held at the University of Santo Tomas.

Duterte earlier ordered a ban on electronic cigarettes and tobacco alternatives, days after the Philippines confirmed its first case of vape-related illness.

Prior to the directive, the DOF submitted to Congress its proposal to increase the excise tax on e-cigarettes to P45 per milliliter, making them at par with regular cigarette packs. 

Package 2 Plus is contained in House Bill 1026, which was passed on third and final reading last Aug. 20. The Upper Chamber’s version, Senate Bill 1074, is still pending but certified as urgent by Malacanang. 

According to Finance assistant secretary Antonio Lambino, the e-cigarette component of Package 2 Plus is projected to generate P1 billion to P3 billion in the first year of its implementation.

In its entirety, the House of Representatives version of Package 2 Plus (including the alcohol tax component) is expected to increase revenues by around P30 billion, while the Senate version is seen to collect an additional P47 billion.

Aside from the importation and use of e-cigarettes, Chua said the DOF is also anticipating the issuance of an EO with regards to the ban on flavored vapes.

He said the agency is supporting this measure to ensure that young Filipinos are not encouraged to smoke.

Meanwhile, Bureau of Internal Revenue (BIR) deputy commissioner Marissa Cabreros said the agency is currently crafting new tax stamps on cigarettes and alcohol products.

“They’re still being worked on. There are some things that are needed to be ironed out because we don’t want to just be imposing our rushed stamps (that are) easily faked or reproduced. It would just defeat the purpose,” Cabreros said.

“So there’s an ongoing discussion with the potential suppliers to ensure the security measures are in place so that there will be proper monitoring of excisable products,” she added.

Cabreros said illicit traders are currently using equipment that enable them to produce counterfeit stamps.

“We’ve been publicly raiding a lot of warehouses. Apparently there are technologies or machines that produce the fake stamps. We want to ensure that we put a stop to that,” the BIR official said.

The government has committed to increase its vigilance against illicit cigarette trading, which could potentially worsen following the recent increases in tobacco excise taxes.

As part of their strengthened measures against illicit tobacco trade, the BIR and the Bureau of Customs (BOC) created a joint task force against traders of smuggled and counterfeit cigarettes. 

Furthermore, the DOF directed both agencies to work with their respective counterparts in China to stop the illicit entry of unregistered cigarette- making machines.