Senate panel pushes higher vape, tobacco taxes vs. smuggling

“What is very prevalent right now is the smuggling of vaping products, and that’s already filtering down to our adolescent population.” (Pexels Photo)

By Wilnard Bacelonia, Philippine News Agency

MANILA – Smuggling and rising vape use among adolescents prompted the Senate to press for higher excise taxes on tobacco and vapor products, Senator Sherwin Gatchalian said Monday as he led a hearing on House Bill 11360.

“The reason for that is that we don’t believe the solution to curbing illicit trade will come from reducing taxes,” Gatchalian, chair of the Senate Committee on Ways and Means, said.

“What is very prevalent right now is the smuggling of vaping products, and that’s already filtering down to our adolescent population.”

The measure, which seeks to amend the National Internal Revenue Code, sets a PHP41 initial tax per pack of heated tobacco (20 units) and PHP66.15 per milliliter of vapor products and cigarettes. Rates will automatically rise by 2 percent every even-numbered year starting 2026 and 4 percent every odd-numbered year until 2035.

The bill also allows the President to raise tax rates by up to 5 percent if the deficit exceeds 2 percent of gross domestic product.

Gatchalian said the proposal includes imposing a single tax rate on all vapor products —whether freebase or nicotine salt— and an ad valorem tax on vaping devices to deter youth consumption.

“Imposing a single tax rate on vapor products and ad valorem tax on devices can curb the increase or hopefully eliminate the increase in the use of vape products among adolescents,” he said.

Gatchalian said nicotine salts, often used in imported products, deliver stronger doses without the harshness of freebase e-liquids, making them more appealing and accessible to the youth due to their affordability.

He said the panel had previously held three hearings —on Jan. 9, Jan. 22, and April 2— focused on improving prosecution of illicit trade.

Despite 1,636 tobacco-related seizures by the Bureau of Internal Revenue from 2023 to 2025, only one case has been decided in court.

The Bureau of Customs had a similarly poor record, with just two court decisions out of 1,296 seizures since 2018.

“These numbers are unacceptable. This is why we need to enhance the enforcement capabilities of our agencies,” Gatchalian said.

Among the reforms proposed were strengthening interagency coordination, allowing local government units (LGUs) to participate in enforcement, adopting product tracking technologies, and removing distinctions in penalties between locally produced and imported untaxed goods.

“This isn’t just about revenue. It’s also about protecting public health and ensuring that we don’t let smuggling undermine our laws and endanger our youth,” he added.

For her part, Senator Pia Cayetano opposed the proposal to reduce excise taxes on tobacco and vape products, warning it would undermine public health and reverse hard-won reforms.

“Public health must never take a backseat to industry profits,” Cayetano said, referring to House Bill No. 11360, which seeks to lower annual tax increases on harmful products.

Cayetano, a longtime health advocate, cited the sharp rise in youth vaping —from 3.2 percent in 2018 to 39.9 percent in 2023— and stressed that sin taxes are vital to discouraging harmful habits and funding Universal Health Care.

Cayetano blamed the “vapedemic” on the 2022 Vape Law, which she said rolled back protections she helped establish under the Sin Tax Reform Act of 2020.

“The goal has always been to protect Filipinos, especially the youth. We must not repeat past mistakes,” she added.