MANILA, Philippines – Filipinos may soon have to pay more for alcoholic drinks, electronic cigarettes, and products for vaping after the House of Representatives approved a bill increasing the excise taxes on these products.

On Tuesday, August 20, lawmakers approved on 3rd and final reading House Bill (HB) No. 1026 with a vote of 184-2-1.

HB No. 1026 is the first measure to successfully hurdle the House in the 18th Congress, after it breezed through the committee on ways and means on August 13 and was passed on 2nd reading in the plenary on August 14. (READ: DOF urges lawmakers to speed up alcohol excise tax hike)

The Sin Tax Coalition thanked ways and means panel chairperson Joey Salceda and the rest of the lawmakers for HB No. 1026’s swift passage in the House.

“Alcohol and tobacco products are leading causes of non-communicable disease, and this measure will be a positive step in discouraging Filipinos from excessively consuming the product,” said Sin Tax Coalition co-convener Dr Anthony Leachon.

The original version of HB No. 1026 initially proposed taxes worth P30 up to P60 on alcoholic drinks only.

But just before the bill was approved on 2nd reading last week, the House substituted its original version with a new one that also imposes P40 to P60 worth of taxes on heated tobacco products or electronic cigarettes and vapor products.

E-cigarette groups like the Philippine E-Cigarette Industry Association and Vapers PH have opposed HB No. 1206, arguing that the House failed to properly consult them before the bill’s passage.

“These proposed heavy sanctions on e-cigarettes and heated tobacco products will result [in] a public health tragedy…. Heavy taxes on reduced-risk products will only result to smokers sticking it out with conventional cigarettes instead of switching to less harmful nicotine products,” said Vapers PH president Mark Czerwin Erana.

A study in the United States, however, showed people who use e-cigarettes are more likely to have heart problems than those who don’t.

The additional government revenue that would be generated from the proposed excise taxes would primarily fund the universal health care program.

HB No. 1206 will now be transmitted to the Senate, where it will have to go through another 3 readings before the measure can be submitted to President Rodrigo Duterte for signing.

How much would the increase be for alcohol taxes? HB No. 1026 would increase excise taxes for distilled spirits like gin, rum, and vodka. The proposed increases are as follows:

• Starting January 2020, 22% ad valorem tax on the net retail price of the alcohol product (excluding excise and value-added taxes) plus a specific tax of P30 per proof liter.
• In addition to the 22% ad valorem tax, specific tax per proof liter will increase to P40 in 2021 and P45 in 2022.
• From 2023 onwards, on top of the ad valorem tax, the specific tax will be increased by 7%.
• For sparkling wines, the bill proposes an ad valorem tax of 15% of the net retail price (excluding excise and value-added taxes) per liter and a specific tax of P656 per liter. The specific tax will increase by 7% in 2021 onwards.
• For still and carbonated wines, it will be P60 per liter, to be increased by 7% starting 2021.
• The tax on fermented liquors and alcopops will be P32 per liter starting 2020, P34 in 2021, and P36 in 2022. From 2023, on top of the ad valorem tax, the specific tax will be increased by 7%.

How much would the increase be for heated tobacco taxes? These are the proposed increases for heated tobacco products and vapor products:

• Starting 2020, tax on heated tobacco products will be P45 per pack of 20 units or packaging combinations of not more than 20 units.
• Specific tax per 20 units of heated tobacco products will increase to P50 in 2021, P55 in 2022, and P60 in 2023.
• For vapor products with nicotine salt, P30 tax per milliliter starting 2020.
• Specific tax per milliliter of vapor products with nicotine salts will increase to P35 to 2021, P40 to 2022, and P45 to 2023.
• For conventional “freebase” or “classic” nicotine products, P4.50 tax per milliliter starting P2020, P5 in 2021, P5.50 in 2022, and P6 in 2023. The tax will also increase by 5% every year starting 2024.

– Rappler.com