MANILA – A bill seeking to rationalize excise tax rates on tobacco and vape products to curb revenue losses from illicit trade hurdled final reading at the House of Representatives.
During the plenary session Monday night, lawmakers voted 190-4 to pass on third reading House Bill 11360, which seeks to amend the National Internal Revenue Code to impose structured tax hikes on tobacco products.
Under the bill, excise tax rates will increase by 2 percent every even-numbered year starting Jan. 1, 2026, and by 4 percent every odd-numbered year from Jan. 1, 2027, until Dec. 31, 2035.
Heated tobacco products will be taxed at PHP41 per pack, while cigarettes and vape products will carry a PHP66.15 levy per pack.
The Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) will set removal thresholds to prevent frontloading.
The bill also grants the President authority to raise tax rates by up to 5 percent if the national government deficit exceeds the target by 2 percent.
A review of tax rates and their impact on government revenue, health costs, and smoking prevalence will be conducted after ten years of implementation.
Nueva Ecija Rep. Mikaela Suansing, the bill’s sponsor, stressed that the proposal could result in an “aggregate revenue recovery of PHP66 billion across five years.”
She highlighted that while the 2013 Sin Tax Law was initially effective in reducing smoking rates and boosting tax revenue, collections have been declining since 2021.
Suansing said revenue from excise taxes on tobacco products fell from PHP176 billion in 2021 to PHP160 billion in 202d and further dropped to PHP135 billion in 2023.
At the same time, the adult smoking rate increased from 18.5 percent in 2021 to 23.2 percent in 2023, largely due to rising illicit trade.
Track-and-trace system for tobacco products
With 177 voted in favor, four against, and no abstentions, House Bill 11286, which mandates a track-and-trace system for tobacco products to strengthen excise tax enforcement, was approved on its final reading.
The measure requires secure digital markers with unique identifiers on all tobacco products.
It also mandates the registration of tobacco manufacturing equipment within 30 days of acquisition or disposal.
The bill defines the crime of illicit trade of cigarettes, cigars, heated tobacco, vape, and novel tobacco products and imposes stricter penalties on violators.
The BIR, in coordination with the National Telecommunications Commission, will be empowered to remove illicit product listings from digital platforms.
Online platforms shall be responsible for ensuring the absence of illegal tobacco products on their sites.
The bill also establishes the Inter-Agency Tobacco Illicit Trade Council, chaired by the DOF, to implement measures aimed at curbing illicit trade in the sector. (PNA)
source：https://www.pna.gov.ph/articles/1243268
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