The House Committee on Ways and Means chaired by Albay Representative Joey Salceda met recently to fine-tune the unnumbered substitute bill to House Bill (HB) 10329 seeking to curb the illicit tobacco trade through the imposition of heavy and differentiated penalties according to the degree of involvement in said activity.
Salceda, in his explanatory note to HB 10329, noted how illicit trade leads to the loss of tobacco tax revenues, diminishing funds that may be channeled to the implementation of Republic Act (RA) 11223 or the Universal Health Care Act.
The veteran legislator added that the illegal trade “also weakens government institutions and aids other criminal activities”.
“Illicit tobacco trade is growing 3% to 8% annually.”
Former lawmaker and now Philippine Tobacco Institute (PTI) president Jericho Nograles reported that the illicit tobacco trade is growing 3% to 8% annually.
Nograles said 51% of the cigarette supply in Mindanao were obtained illegally; in some areas, 90% of the cigarettes are illegally sourced. In north and central Luzon, the illicit trade accounts for 12.8% of the cigarette supply while in southern Luzon is at 5.4%.
To address these issues, the PTI proposed revisiting the tax system to find an optimal rate balancing revenue generation and consumption discouragement, imposing a single tax rate for all vapor products, and a whole-of-government approach involving the Bureau of Customs, Bureau of Internal Revenue, Department of Trade and Industry, local government units, among others.
“We also suggest that the DOJ (Department of Justice) relentlessly prosecute illicit importers, manufacturers, and traders,” he added.
“Taxes should also be imposed on higher-quality e-cigarettes and vaping products to discourage the use of unregulated devices.”
Former Health Secretary and now Iloilo Representative Janette Garin agreed that taxes should also be imposed on higher-quality e-cigarettes and vaping products to discourage the use of unregulated devices, especially among students and young workers. Garin noted the shift among the youth for vapes and e-cigarettes.
“The new generation, they would go by what is in. So, mas sosyal ang dating ng nagve-vape o nag-e-ecigarette kesa doon sa sigarilyo,” the veteran legislator said, noting the shift in preference has also impacted excise tax revenues.
Deputy Speaker Kristine Singson-Meehan proposed a further clarification of the bill’s declaration of policy.
According to Singson-Meehan, the said provision should include the statement that “The State also acknowledges the need to protect legitimate businesses in order to ensure prompt and proper payment of government taxes on tobacco products.”
