The government will lose an estimated P33.7 billion in revenues from the illegal tobacco trade this year and P36.5 billion in 2025. The value is seen rising to P39.6 billion by 2026 and ballooning to P42.54 billion a year later. This would hamper the administration's ability to sustain funding for its various social welfare programs.
In addition, the rapid transition of tobacco consumers to alternative products, like e-cigarettes or vapes, is impacting government revenue efforts as taxes and duties are lost due to unregulated sales.
"Illicit trade deprives the Philippine government of much-needed tax revenue and cheats everyone: society, consumers, and legitimate businesses. Profits of legitimate businesses are compromised, public health goals are undermined, and taxes due the government to help the economy are gravely affected," said Atty. Venus Gaticales, chief of the Bureau of Internal Revenue's (BIR) Excise Large Taxpayers Field Operations Division."
Speaking at a forum on the illicit trade of tobacco products, Gaticales said the two main challenges in collecting proper taxes on tobacco products are smuggling and counterfeit products.
Bantay Konsyumer, Kalsada, and Kuryente (BK3) organized the forum “Navigating the Tobacco and Tobacco Alternative Markets: Championing Economic Growth and Consumer Protection and Safety.”
She added, "The tobacco industry is a significant component in the excise tax collection, contributing about 40.16% or P46.69 billion as of April 2024. Under Republic Act 11346, 50% of total excise tax collection from tobacco products shall be allocated and used exclusively: 80% for Universal Health Care (UHC) & 20% for Health Facilities Enhancement Program (HFEP), and for LGUs producing Burley & native tobacco and Virginia tobacco.
During the forum, the panelists agreed that the tobacco industry has significant potential for contributing to the Philippines’ economic growth and development. However, the continuous rise of illicit trade, even in alternatives (like e-cigarettes), threatens this potential.
This illicit trade undermines legitimate tax-paying businesses, impacts government revenues, and compromises consumer safety.
"In an era where smoking alternatives are gaining popularity, it is crucial to understand the associated risks. Alternative tobacco products, which have grown massively in just a few years, have caught the attention of
consumers and public health professionals alike. Many view this method as a potentially cost-effective and safer alternative. However, misconceptions and myths also surround this belief," the organizer said in a statement.
The rapid growth of the alternative tobacco product market has led to small players creating their own devices and liquids. These products often lack proper registration and testing, contributing to illicit trade and even risking consumer safety. Moreover, illicit trade impacts government revenue as taxes and duties are lost due to unregulated sales.
However, it is essential to note that regulated e-cigarettes, especially those from legitimate and established companies, adhere to strict safety and quality standards. These products undergo rigorous testing and registration processes, ensuring they meet safety benchmarks. By choosing regulated products, consumers can
enjoy a safer vaping experience.
Therefore, while addressing the issues of product safety, quality standards, and revenue loss, it is essential to highlight the benefits of regulated e-cigarettes. This approach promotes safer alternatives to traditional smoking and supports legitimate businesses and government revenues.
Ban on 'candy-flavored' vapes
Meanwhile, Assistant Secretary Amanda Nograles, head of the Department of Trade and Industry's Consumer Protection Group, said the agency would require all vapes and vape products sold in the market to be registered starting June 5.
"However, as a grace period, we will still allow vape resellers to dispose of their unregistered inventories until January 5, next year. After that, we will start confiscating all unregistered products.
According to Nograles, the move is part of a comprehensive strategy to make vape and vape products inaccessible to children.
In a new campaign called "Hooking the Next Generation," the World Health Organization warned that the tobacco and nicotine industry is designing their products and implementing marketing campaigns to entice children aged 13–15 years to patronize e-cigarettes.
"These industries are intentionally designing products and utilizing marketing strategies that appeal directly to children," said Dr Ruediger Krech, WHO Director of Health Promotion. "The use of child-friendly flavors like cotton candy and bubblegum, combined with sleek and colorful designs that resemble toys, is a blatant attempt to addict young people to these harmful products."
But Nograles said all marketing and advertising campaigns that target children will be banned, including vape designs that will make it attractive to the youth.
"We are also banning vape products endorsed by influencers or celebrities," Nograles added.
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