Debates on vaping tax rates expected

September 29, 2019

THE Senate expects ‘haggling’ and ‘lobbying’ in the crafting of the final rates for vapor e-cigarettes and heated tobacco products after its Senate ways and means committee submitted an unusually higher tax rate.

Senate President Vicente “Tito” Sotto III told a media forum over the weekend that the rates reported out by the Senate panel of Sen. Pia Cayetano will  have to be debated until a middle ground is reached.

Sotto said he personally thinks that the committee rates were a little high when compared to the version passed by the House of Representatives.

“Medyo ( mataas ) sa tingin ko personally. Pero depende pa rin sa debate namin ,” Sotto said during the Saturday Forum at Annabel’s in Quezon City.

Sotto assured that the rates set by Cayetano’s panel are still bound to change when it goes to plenary for debates.

He also noted that there were opinions presented during the hearings that since there’s claim that vapor and heated tobacco products are less harmful, the tax should be lower compared to cigarettes.

“I don’t blame the committee for coming out with a report to that effect (high rate). Doon naman sa amin , hindi nawawala ang — haggle,” Sotto said.

He added: “It’s better if you set the rates a bit high at first so that you can get the right rate (the middle ground) later.”

The Senate President also did not rule out possible lobbying by vapor and heated tobacco companies to get a favorable tax rate but doubted if they would be successful.

He nevertheless noted that these groups were limited to attending the hearings and making their presentations to the panel members.

“Hindi naman madaling mag-lobby sa Senate. Masyadong maraming republika dun,” he pointed out.

Vapor and heated tobacco products are starting to creep into the country with major global players launching or about to launch their own vapor or heated tobacco products.

JUUL from the US and RELX from China have started selling in the country, albeit on a limited scale. Tobacco firms like PMI, BAT and JTI have likewise entered this emerging market with their own vapor or heated tobacco brands but have yet to make their official launch in the country.

Sotto said the Senate will still rely on the research materials that will be presented by Cayetano’s committee to arrive at the right formula.

Cayetano’s committee practically copied the version of the Department of Finance (DoF), which proposes a similar tax rate to that of conventional cigarettes to raise more funds for the Department of Health’s (DoH) cash-strapped Universal Health Care program.

Bulk of the funding for the UHC will come from higher taxes on tobacco, alcohol and, belatedly, vapor and heated tobacco products.

The proposed rate is likewise P35 higher than the P10 tax originally approved by Congress and enacted into law, which will be implemented also beginning January 2020. Congress is amending a law that has yet to be implemented next year.

The DOF, however, deemed the P10 tax too low and came up with its own proposal calling for higher tax on vapor and heated tobacco e-cigarettes.

The Senate leader likewise sees a long-drawn debate that it would be impossible for the chamber to approve the Committee report in the plenary before Congress takes its Halloween break starting October 4, 2019.