The Senate Committee on Ways and Means on Monday, May 19 expressed firm belief that reducing taxes is not the solution to help curb illicit tobacco trade but that strengthening enforcement against such activities is still the best course. 

Sen. Sherwin Gatchalian, chairman of the ways and means panel, pointed this out during the committee’s public hearing on House Bill No. 11360 or the bill that seeks to lower the excise tax for cigarettes, tobacco, heated tobacco and vapor (e-cigarette/vape) products. 

The measure primarily seeks to curb the decline in tax collection from these products as a result of the Sin Tax Law, or Republic Act No. 10351 or the Sin Tax Reform Act which imposed higher levy on goods considered harmful to society, such as alcohol, tobacco and sweetened beverages. 

Gatchalian said the panel is still strongly recommending enhancing prosecution rates, and solutions on how to improve the prosecution of cases being filed against those involved in the smuggling of these goods.

“I'll give credit where credit is due. Our enforcement agencies have been working tirelessly to apprehend smugglers and illegal cigarettes in our country. However, if we don't prosecute them, then nothing is going to happen,” Gatchalian stressed. 

“We believe in strengthening the enforcement agencies, coming up with new mechanisms such as incentives for our enforcement agencies, to curb illicit trade in our country. (Because) what is very prevalent right now is the smuggling of vaping products, and that's already filtering down to our adolescent population,” he added.

“So, we would like to focus on these vaping products because the arbitrage is creating a lot of disincentives or a lot of problems insofar as our adolescent population is concerned,” he stressed. 

During the hearing, the panel concentrated on vape goods, with the lawmaker pointing out the alarming increase in the uptake of vape products by the younger segment of the population which is due to the fact these commodities are cheaper to import. 

While imposing a single tax rate on vapor products and ad valorem tax on devices can curb the increase or hopefully eliminate the increase in the use of vape products among adolescents, the senator said the solution to curb illicit trade will not come from the reduction of taxes, but will come from strengthening of law enforcement. 

“It will come from strengthening our enforcement. It will come from giving incentives to our enforcement agencies and also mobilizing our LGUs (local government units). As well as, of course, winning the cases. Without winning the cases, nothing's going to happen,” Gatchalian reiterated.

The senator also demanded action from the Department of Trade and Industry (DTI) which he noted has been lacking in regulating the sale of vape products. 

“Based on data, there’s 40 percent of adolescents, meaning teenagers, that are smokiing vapes. It increased from seven (7) percent just five years ago. What’s alarming here, is we don’t know what they are using because there were no toxicology reports. That’s where we are right now,” he said.

“So please submit to the committee an action plan and we will not take this lightly. We will further grill you on this especially since the budget season is near. So make sure that you submit to us a credible, feasible and effective action plan,” said the lawmaker. 

Meanwhile, Sen. Pia Cayetano, who won another term in the Senate, echoed fellow health advocates in strongly opposing the lowering of excise taxes on tobacco and vapor products as sin taxes are desgined to protect public health by discouraging the consumption of harmful and addictive products, especially among the youth.

Cayetano lamented that the Vape Law or Republic Act No. 11900 overturned the protective measures offered under the Sin Tax law, resulting in what is now known as the “vapedemic.”

“We should not repeat the mistakes of the Vape Law, which stripped away critical regulatory protections established under the Sin Tax Reform Act. We must not allow history to repeat itself,” Cayetano stressed.

“Reducing taxes clearly does not address the health costs of these sin products, but even adds to them. It also undermines the government's ability to fund essential health services, including the Universal Health Care program, which heavily relies on sin tax revenues,” she added. 

Cayetano said she welcomes the Senate ways and means committee chairman’s  statement that the answer to illicit trade is not lowering sin taxes.

“The goal of our Sin Tax laws has always been clear - to discourage the use of harmful products and protect the health of every Filipino,” she said.

“We must stay the course and craft policies that will truly prioritize the safety, well-being, and future of every Filipino, especially the youth,” she concluded.