Report Strengthening Enforcement Over Tax Reductions in Illicit Tobacco Trade Fight

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The Senate Committee on Ways and Means firmly believes reducing taxes is not the solution to curbing illicit tobacco trade. During a public hearing on May 19, Sen. Sherwin Gatchalian, the committee chairman, emphasised that reinforcing enforcement remains the best approach, particularly in light of rising illicit activities, including smuggling.

 

The committee discussed House Bill No. 11360, which seeks to lower the excise tax on cigarettes, tobacco, heated tobacco, and vapor (e-cigarette/vape) products. The bill aims to address the decline in tax revenues following the implementation of the Sin Tax Law (Republic Act No. 10351), which increased levies on goods harmful to society.

 

Sen. Gatchalian praised enforcement agencies for their efforts against smuggling but stressed the need to enhance prosecution rates, suggesting incentives for agencies to curb illicit trade effectively. He highlighted the prevalent smuggling of vaping products, which has permeated adolescent markets due to these products being cheaper to import.

 

Addressing the increase in vape use among youth, Gatchalian suggested single tax rates on vapor products and ad valorem taxes on devices to potentially mitigate the issue. However, he underscored that the real solution lies in robust law enforcement rather than tax reductions, alongside mobilising local government units and winning prosecution cases.

 

Sen. Pia Cayetano echoed the sentiment against lowering excise taxes on tobacco and vapor products, advocating for the protection of public health through sin taxes designed to discourage the use of harmful products. She criticised the Vape Law (Republic Act No. 11900) for undermining the Sin Tax Law's protective measures, attributing the ongoing "vapedemic" to weakened regulations.

 

Cayetano stressed that reducing taxes could escalate health costs and diminish government revenue for essential health services, like the Universal Health Care program. She commended the committee's stance against lowering sin taxes, reinforcing the goal of Sin Tax laws to safeguard public health, particularly for young Filipinos.

 

Overall, the consensus remains to fortify enforcement strategies over tax reductions to address the challenges posed by the illicit trade of tobacco and related products, ensuring policies prioritise the health and safety of the population.

 

  Adapted by ASEAN Now from Manila Bulletin 2025-05-19