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Philippines: Higher tax eyed for e-cigarettes
MANILA, Philippines — The Department of Finance (DOF) will push for the approval of higher excise taxes on electronic cigarette and vaping products in the 18th Congress, a top official said over the weekend.
In a text message to reporters, Finance Secretary Carlos Dominguez said the DOF is planning to submit a proposal to the 18th Congress seeking to further raise the excise tax rates on e-cigarettes to make them at par with regular cigarette products.
“The tax imposed is too low. The target is to make it equivalent to cigarettes,” Dominguez said.
Effective Jan. 1, 2020, electronic cigarettes or electronic nicotine delivery systems will be levied an excise tax rate of P10 per 10 milliliters (ml) of liquid nicotine, pursuant to the Sin Tax Reform Bill approved by Congress last June.
The bill also provides for a unitary excise tax of P45 per pack on tobacco products effective in 2020, followed by annual increases of P5 per pack until the rate reached P60 in 2023, and a five-percent annual increase thereafter.
Through a new bill in the next Congress, Dominguez said the DOF wants to further increase the tax rate for vaping products to P45 per ml, similar to the rate of regular cigarettes. He said the typical 0.7 ml pods are proposed to have a discounted rate of P31.5.
The suggested rate for heated tobacco products was also set at P45 per pack.
“We also propose limiting the availability of e-cigarette or vape juice flavors to those that are similar to regular tobacco and regular menthol cigarettes. There is strong evidence suggesting that many other flavors tend to encourage initiation and heavy use among the young,” Dominguez said.
Dominguez said the DOF hopes to have the proposed bill passed within the year so that it can be simultaneously implemented with the higher tax rate on tobacco products to be imposed starting 2020.
Prior to the passage of the Sin Tax Reform Bill, the excise tax on tobacco products has already been increased to a rate of P35 per pack, in compliance with the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
Estimates from the DOF showed the new tax rates are expected to generate about P15 billion in additional government revenues in 2020, P22 billion in 2021, P26 billion in 2022, P32 billion in 2023, and P31 billion in 2024, for a total of P126 billion over the five-year period.
Aside from the higher tax rates on e-cigarettes, the DOF is also pushing for the passage of the remaining packages under the Comprehensive Tax Reform Program in the next Congress.
These include Package 2, which aims to lower the corporate income tax (CIT) and modernize the fiscal incentives system; Package 3, which seeks reforms in the property valuation system; Package 4, which rationalizes capital income taxation; and the remaining proposal under Package 2 Plus on alcohol excise taxes.
According to the DOF, 13 private sector and industry groups, in a July 8 letter addressed to President Duterte, have expressed support for these reforms, describing them as crucial measures to propel the Philippine economy and improve competitiveness.
They also supported the proposed amendments to the Public Service Act, Foreign Investment Act, and Retail Trade Act, the DOF said.
Source: https://www.philstar.com/business/2019/07/22/1936653/higher-tax-eyed-e-cigarettes#oc7GluuLA3hKQxuu.99