Metro Manila (CNN Philippines, November 21) — A House committee on Monday urged the vape industry to improve its tax compliance after the sector sought “looser regulations” for the manufacture, sale and use of their products.
House Ways and Means Committee chairman Rep. Joey Salceda warned the vaping industry to become more diligent in paying their taxes before the issue “blows up.”
“They asked for looser regulations, through the Vape Regulation Law, which supplanted many of the stricter conditions under the Tax Code. Tapos hindi pala sila magbabayad ng buwis [But they won’t even pay their taxes]. Pay up, before this blows up in your face,” he said.
Citing data from the Bureau of Internal Revenue (BIR), Salceda said the government collected ₱242 million in excise taxes from heated tobacco products and ₱7 million from vapes in 2021.
Data submissions from the Bureau of Customs (BOC) included VAT and duties but not excise taxes. Salceda said market data suggests the industry generates ₱12.3 billion in sales.
“In 2019, when the Vape Tax Law was being discussed, government revenue agencies projected as much as ₱1.4 billion in tax revenues annually from the measure. In short, we are off target in taxes, while sales projections seem to be on track,” said Salceda.
The panel discussed House Bill No. 5532 authored by Salceda, which seeks to increase taxes on vape products by around 14% and levy an additional tax on vaping devices.
Salceda said the “lackluster performance” of both the BIR and BOC also indicates the possibility of smuggling and tax evasion.
“So, it’s a double-whammy for vape, as far as taxes are concerned,” he said.
The panel formed a technical working group to write the draft committee report for HB 5532, which will be subsequently voted on for approval by committee members.
