
The Philippine Tobacco Institute (PTI) says pausing excise tax hikes can stabilize cigarette prices and curb demand for smuggled goods. Photo credit: Kguirnela, CC3.0.
The Philippine Tobacco Institute (PTI) proposed a series of measures to combat the illicit tobacco trade, including a pause on raising tobacco excise taxes, highlighting illicit trade’s detrimental impact on tobacco farmers and government revenue.
Speaking at a public hearing of the Senate Committee on Ways and Means, PTI president Jericho Nograles referenced Euromonitor data estimating that illicit tobacco products could make up 19% of the domestic market in 2025. He pointed out that Mindanao is particularly affected, with illicit cigarettes comprising 51% of sales in the region, and some areas experiencing rates exceeding 90%.
“By pausing the annual excise tax increases, the prices of legitimate products such as cigarettes can stabilize and decrease the incentive for consumers to purchase illicit smuggled products,” Nograles said. “The second reason is the moratorium period can also strengthen enforcement measures against illicit trade.”
In the Philippines, an excise tax of PHP60 (US$1.06) is imposed on a pack of 20 cigarettes, while vape products are taxed at PHP54.60 (US$0.96) per milliliter for salt nicotine and PHP63 (US$1.12) per 10 milliliters for classic nicotine. These rates are in accordance with the excise tax schedule set by the Bureau of Customs for 2024.
Nograles also referenced Singapore's implementation of a similar moratorium, which he claimed ultimately led to an increase in tax revenue.
Additionally, PTI is urging the government to review the tax system and establish a single excise tax rate for all vapor products to streamline collection and enforcement, he added.
“Illicit tobacco trade created imbalanced and inequitable conditions against the legitimate tobacco industry,” Nograles said. “The tobacco industry is happy to pay taxes so long as the illicit trade is kept at bay, as it undermines so many other government efforts.”