To deter illicit nicotine products, the House of Representatives in the Philippines approved a measure to introduce a track-and-trace system for tobacco products. Under HB 11286, cigarettes, vapes, and tobacco products would need to be affixed with a stamp that has “physical or digital features,” while requiring companies to register equipment needed in making cigarettes and electronic vapes with the government.
“The illicit tobacco trade in our country is alarming,” Rep. Ray Florence T. Reyes, who sponsored the measure, said. “One in five sticks of cigarettes did not pass the quality control and is more likely to cause death. “These unregulated products expose consumers to greater health risks.”
Meanwhile, the House Ways and Means panel is eyeing an annually alternating tax rate hike scheme on cigarette products, while also tweaking the tax rate over all tobacco products. HB 11360 seeks to implement an odd-and-even numbered tax rate increase for cigarettes to curb the surge of illicit tobacco products in the Philippines.
“The rate of tax imposed shall be increased by 2% every even-numbered year effective on Jan. 1, 2026, and 4% every odd-numbered year, effective on Jan. 1, 2027,” the bill stated, changing the tax rate structure across all tobacco products.
“The increase shall be implemented until Dec. 31, 2035, provided that after the 10-year period, a review of the tax imposed and its impact on revenue collections, health costs, and prevalence of smoking shall be conducted.”
Discussions over the levied tax rates for cigarettes have taken a front seat at the House tax panel, which is eyeing to reduce excise tax losses over the tobacco industry due to smuggling. Excise tax rates for heated tobacco, cigarettes, and vape products are levied a yearly 5% tax rate increase from 2024, according to the Bureau of Internal Revenue’s (BIR) website.
“BIR revenue data show that further successive increases in tax rates have failed to result in higher collections,” Euvimil Nina R. Asuncion, revenue operations group director for the Finance department, said. The BIR collected only P134 billion (USD $2.3 billion) of its budgeted P185 billion (USD $3.1 billion) tobacco excise tax in 2024.
However, Anthony C. Leachon, former Department of Health advisor and convener of health advocacy group Sin Tax Coalition, said the bill would actually lower revenues collected.
“We project that this will lead to P29 billion of forgone revenue for public health and tobacco farmers from 2026 to 2030 and will make cigarettes and electronic smoking devices more accessible to the youth and the poor,” he said.
