THE Department of Finance (DOF) wants lawmakers to impose higher taxes on electronic cigarette (e-cigarettes) and alcoholic beverages.
“The tax imposed [on e-cigarettes and alcoholic beverages] is too low,” Finance Secretary Carlos G. Dominguez III told business reporters over the weekend. “[The] target is to make it equivalent to cigarettes.”
The 17th Congress has submitted Senate Bill (SB) 2233, which awaits the President’s signature and contains provisions on excise tax rates for these products.
The measure seeks to increase the excise tax on cigarette packs to P45 by January 1, 2020, from the current P35 per pack, with the tax rising by 5 percent annually beginning 2024. The rates for e-cigarettes, specifically heated tobacco products, are lower at P10, which is also the same rate for vapor products with less than 10 milliliters (ml) of liquid nicotine content. Those containing higher liquid nicotine content are taxed higher than P10.
Dominguez said the increase in excise tax rates on e-cigarettes and related products would be one time only and not under tranches.
“Yes, to the next congress. For vapes like Juul [Labs Inc.], we propose P45 per ml. For the typical 0.7-ml pod, it will be a discounted rate of P31.50,” he added. “The approved bill only has [a] P10 [rate]. For heated tobacco, we propose P45 per pack similar to regular packs. These rates are based on equivalency of volume or heated pack to regular pack of cigarettes.”
Apart from proposing new rates on e-cigarettes and vape products, Dominguez said he also wants lawmakers to limit the availability of these devices, as well as the flavors used for these products.
“We also propose limiting availability of e-cigarette and vape juice flavors to those that are similar to regular tobacco and regular menthol cigarettes,” he said. “There is strong evidence suggesting that many other flavors tend to encourage initiation and heavy use among the youth.”
Dominguez claims business groups expressed strong support for the Duterte administration’s legislative agenda for the 18th Congress, which starts sessions on July 22.
This includes the remaining packages under the Comprehensive Tax Reform Program (CTRP), which focus on reforms in the corporate income tax (CIT) and fiscal incentive system, in property valuation and assessment, and in capital income and financial taxation; plus new excise taxes on alcohol, e-cigarettes and vapor (vaping) products.
Other priority measures are the amendments to the Public Service Act, Foreign Investment Act and Retail Trade Act.
The government’s Economic Development Cluster (EDC) had previously identified these bills as among their priorities during a forum last July 1.