‘Vape products should be taxed higher than cigarettes’

MANILA, Philippines — The government should consider imposing higher taxes on vape products than traditional cigarettes as consumption continues to worsen especially among the youth.

During the Senate Committee on Ways and Means hearing yesterday, Bureau of Internal Revenue (BIR) assistant commissioner Jethro Sabariaga said cigarettes and heated-tobacco products should be taxed the same.

However, he argued that this should not be the case for vape products as these should be slapped with much higher taxes.

“One vape product is not the same as the consumption of one pack of cigarettes. The government will be losing a lot as vape is consumed for a longer period of time,” Sabariaga said.

On average, a cigarette is consumed in 300 puffs whereas the lowest number of puffs on vapes is 600 as per representation in its labelling.

Sabariaga added that higher taxes which would make vape products more expensive can hinder the younger generation from purchasing.

Data showed that the prevalence of vape product users has jumped to 40 percent among adolescents as of 2023 from just 7.5 percent in 2021.

Committee chairman Sherwin Gatchalian said there is a need to arrest the significant increase of usage of vape products among the young people.

“We are in a dangerous stage for our country where the young are smoking chemicals we do not know,” he said.

To address the proliferation of vape products, particularly illegal ones, the revenue agency last year imposed the mandatory BIR-issued excise stamps.

Lack of internal revenue stamps means non-payment of excise taxes, which would result in the seizure of vape products and the possible filing of tax evasion cases.

Prior to the stamps in 2023, there were only 11.2 million milliliters of vape products that were imported and subjected to taxes.

This surged to 130.5 million milliliters in 2024 following the imposition.

BIR’s proposal comes as the Senate deliberates on proposals to amend the excise tax on tobacco products amid worsening illicit trade.

A counterpart measure in the House of Representatives seeks to lower the current tobacco excise tax rate which increases by five percent annually.

Gatchalian earlier proposed a unitary tax system for vapor products and ad valorem tax on vaping devices.

Gatchalian, however, remained firm that lowering taxes cannot combat illicit trade effectively and that enforcement should be the priority.

During the same hearing, leading cigarette manufacturer Philip Morris International-Fortune Tobacco Corp. maintained that the government needs to rationalize the tax rates amid ineffectiveness leading to lower government revenues.

Instead of the five-percent annual increase, PMFTC proposed an odd-even scheme in hiking the tobacco excise taxes: zero percent every even-numbered year and six percent every odd-numbered year.

PMFTC said such a scheme could boost revenues by up to P120 billion every year.