THE House of Representatives approved on second reading a measure that will introduce a track-and-trace system for tobacco products, a proposal seen deterring smuggled cigarettes.
In a voice vote, House Bill (HB) No. 11286, which seeks to strengthen the cigarette tax administration by implementing a track-and-trace system for all tobacco products, advanced in the chamber.
Under the bill, cigarettes, vapes, and tobacco products would need to be affixed with a stamp that has “physical or digital features,” while requiring companies to register equipment needed in making cigarettes and electronic vapes with the government.
“The illicit tobacco trade in our country is alarming. One in five sticks of cigarettes did not pass the quality control, and is more likely to cause death,” Party-list Rep. Ray Florence T. Reyes, who sponsored the measure, told the House floor.
“These unregulated products expose consumers to greater health risks,” he added.
Meanwhile, the House ways and means panel is eyeing an annually alternating tax rate hike scheme on cigarette products, while also tweaking the tax rate over all tobacco products.
The House tax committee made public on Tuesday HB No. 11360, which seeks to implement an odd-and-even numbered tax rate increase for cigarettes in an effort to curb the surge of illicit tobacco products in the Philippines.
“The rate of tax imposed shall be increased by 2% every even-numbered year effective on Jan. 1, 2026, and 4% every odd-numbered year, effective on Jan. 1, 2027,” the bill stated, changing the tax rate structure across all tobacco products.
“[The increase shall be implemented] until Dec. 31, 2035, provided that after the ten-year period, a review of the tax imposed and its impact on revenue collections, health costs, and prevalence of smoking shall be conducted,” it added.
Heated tobacco products would be charged with a P41 tax per pack of 20, with vape and cigarettes being imposed with a P66.15 tax per pack, according to the proposal.
Discussions over the levied tax rates for cigarettes have taken a front seat at the House tax panel, which is eyeing to reduce excise tax losses over the tobacco industry due to smuggling.
Excise tax rates for heated tobacco, cigarettes, and vape products are levied a yearly 5% tax rate increase from 2024, according to the Bureau of Internal Revenue’s (BIR) website.
“BIR revenue data show that further successive increases in tax rates have failed to result in higher collections,” Euvimil Nina R. Asuncion, revenue operations group director for the Finance department, told lawmakers on Monday.
The BIR was P52 billion short of its P185 billion tobacco excise tax collection target last year, collecting only P134 billion in 2024.
The House tax panel earlier eyed imposing a pause on the yearly excise tax rate increase over tobacco products, a proposal bucked by health advocates.
HB No. 11360 would lower the taxes collected from tobacco products, Anthony C. Leachon, former Department of Health advisor and convener of health advocacy group Sin Tax Coalition, said in a statement sent to BusinessWorld.
“We project that this will lead to P29 billion of forgone revenue for public health and tobacco farmers from 2026 to 2030 and will make cigarettes and electronic smoking devices more accessible to the youth and the poor,” he added. — Kenneth Christiane L. Basilio
