House now eyes even higher tax for vapers

By Charmaine A. Tadalan
Reporter

THE HOUSE of Representatives Ways and Means committee is looking at imposing even higher excise tax rates on vapor and heated tobacco products in response to President Rodrigo R. Duterte’s order last Tuesday to ban their importation and use in public.

“… [G]iven the logic of the initial reported ban — precautionary principle — we might as well go for a higher rate than P25-45/ml,” Committee Chairman and Albay-2^nd District Rep. Jose Ma. Clemente S. Salceda told reporters in a mobile phone message.

Mr. Salceda on Wednesday said the committee was to propose exclusion of vapor and heated tobacco products from higher taxes as they are already taxed under Republic Act No. 11346, which translates to about P1.4 billion in foregone revenues.

“The 1 (million) vape users are almost totally upper-middle to high-income class versus the 23 (million) smokers, with 7 (million) in the lowest 50%. The entry cost to vaping is relatively high at P1,600,” Mr. Salceda said.

The law, enacted on July 25, will gradually raise excise tax rates on tobacco products to P60 per pack by 2023 from P35 currently and introduced a P10 per pack rate on heated tobacco products (HTPs) in 2020. It also introduced the following rates on vapor products: P10 for 10 milliliter vapor products, P20 for 20 ml, P30 for 30 ml, P40 for 40 ml, P50 for 50 ml and so on.

House Bill No. 1026, approved on Aug. 20, seeks to impose rates on HTPs similar to those of regular tobacco products. It also proposed to increase excise tax rates on vapor products with nicotine salt to P30 per milliliter beginning 2020 and by P5 annually until it reaches P45/ml in 2023.

It provided a much lower rate on vape products with conventional nicotine at P4.50/ml in 2020; P5/ml in 2021; P5.50/ml in 2022; and P6/ml in 2023.

His counterpart, Senator Pia S. Cayetano on Thursday discussed her committee’s proposal to tax said products, even as she agrees with their total ban.

“I just have to push through with my part of the job. My job is to pass the taxation measure, whether or not there’s an EO (executive order) that comes out. If something comes out, whether it’s a total ban, I have to be ready,” Ms. Cayetano told reporters.

“This taxation has to be more or less of permanent nature. Pa’no kung temporary lang ‘yung ban tapos walang tax measure in place? (What if the ban were temporary and there is no tax measure in place when it ends?)”

Senate Bill No. 1074, meanwhile, proposed to increase rates on HTPs to P45 per pack in 2020 and by P5 every year until it reaches P60 in 2023. The same rates will be imposed on vapor products, whether they use nicotine salt or conventional nicotine. The bill now awaits approval of the proposed P4.1-trillion national budget for 2020 before it progresses in plenary.

Ms. Cayetano said she is in constant communication with other Senators and has relayed the request of the Department of Finance for them to approve the said measure, which Malacañang has certified as urgent, before the year ends.

The measure will partially fund implementation of Republic Act No. 11223, or the Universal Health Care Act (UHC), starting next year.

Health Secretary Francisco H. Duque III told reporters that the ban on these products will not have an impact on universal health care funding.

“There’s a very insignificant relationship between banning vapes and the funding for UHC. Why? Because the market of e-cigarettes and vapes is very small. It’s miniscule. That’s why it’s good that if it’s going to be banned now, habang kokonti pa, hindi pa maramdaman yung kanyang tax impact(while the market is still small, the tax impact will be negligible),” Mr. Duque said.

“At this point, I support the move to ban it while it hasn’t really had a much bigger share of the market.”

Ms. Cayetano said she will push for another measure to regulate use of e-cigarettes and vapor products.

“Taxation is just a means, a tool to help make these products that are harmful less accessible to the vulnerable, especially the youth,” she said.

“Pero meron din akong draft bill to regulate vaping and e-cigarettes, etc., na ready akong isalang at i-defend as soon as mapasa ko na ‘tong taxation portion (But I also have a draft bill to regulate vaping and e-cigarettes… I am ready to file the bill and defend it as soon as this taxation portion is approved).”

Among others, Ms. Cayetano is considering prohibition of the sale of e-cigarettes, heated tobacco and vapor products to people under the age of 25 years as well as a ban on or limits to advertisement space for said products and designation of select points-of-sale. — with Gillian M. Cortez