Excessive taxation of cigarettes and vapes will fuel illicit trade, warns Australian expert

Urging the Philippine government to learn from his country’s policy mistakes, an Australian expert has warned that imposing higher taxes on cigarettes and vaping products will fuel illicit trade and undermine tobacco control measures.

- 

“Governments pull the taxation lever to reduce public health risks, curb tobacco use, and generate revenue. In principle, that makes sense. But the reality is annual tax rate increases mandated in both the Philippines and Australia are now producing diminishing returns in government revenues and fueling organized crime,” said Rohan Pike, a security expert with 25 years of police and customs experience at the Australian Federal Police and the Australian Border Force.

Pike was one of the resource personsduring the recent hearing on House Bill 11360 which seeks to curb illicit trade in cigarettes and tobacco products held by the Senate Committee on Ways and Means chaired by Senator Sherwin Gatchalian.

The Bill proposes a schedule of excise tax increases, with 2% increases every even-numbered year starting January 1,2026and 4% increases every odd-numbered year beginning January 1, 2027.

It also provides for a unified excise tax rate for freebase and nicotine salt vapor products.

Pike has led successful and high-profile international cases against fraud, trade crime, foreign bribery, corruption, and money laundering.

He has provided advice on fighting illicit trade to the governments of Australia, Papua New Guinea, Timor Leste, and Pakistan, among others. He helped the Australian Retailers Association establish Australians to Stop Counterfeiting and Piracy (AUSCAP), a coalition of industry groups, businesses, and trademark owners dedicated to stopping illegal trade.

Australia, which has one of the most restrictive tobacco and vaping policies in the developed world, has raised excise taxes on tobacco by 800 percent since 2010, according to Pike.