The Philippines will miss its PHP362.2 billion ($6.32. billion) excise tax collection goal this year due to declining demand for tobacco products, reports Business World. Tobacco excise accounts for more than 40 percent of the country’s excise tax take, according to Jethro Sabariaga, assistant commissioner of the Bureau of Internal Revenue (BIR).
Sabariaga noted that tobacco consumption has been steadily decreasing over the past decade “You don’t see a lot of people smoking cigarettes these days. Even visually, you can confirm the shift in market demand,” Sabariaga said, adding that the collection growth in other excisable articles will not be enough to offset the decline in tobacco excise.
The public’s shift to vape products has also been affecting the bureau’s excise tax take, according to Sabariaga. A single vape product is equal to one cigarette pack in excise taxes, but vape products often take longer to consume, he said.
“So, a cigarette smoker shifting to vape, who usually consumes 10 to 15 packs of cigarettes a month, will probably just buy one vape product for the month, or worse, one for two months,” Sabariaga was quoted as saying.
The BIR has also faced challenges in collecting excise taxes due to the stubborn illicit trade in tobacco products.
In the first half of 2024, the agency lost around PHP7.2 billion in potential revenue from seized tobacco and vape products.