Proposed tobacco tax cut unlikely to curb illicit trade — AER

THE ACTION for Economic Reforms (AER) and government officials are opposing bills that seek to cut tobacco excise taxes, arguing that such measures are unlikely to curb illicit trade without stronger enforcement and a nationwide licensing system.

- Aubrey Rose A. Inosante

“We're against the rolling back of tobacco taxes because according to our projections, it will lead to at least two million new smokers by 2035, and at least P167 billion worth of foregone revenues,” AER Advocacy and Communications Officer Sofia P. Rodrigo said at an event on Tuesday.

The estimate is based on House Bill (HB) No. 11360 which was passed by the House of Representatives in January but failed to gain traction in the Senate before the 19 c Congress closed.

Despite this, lawmakers have filed HB 5207, HB 5212, and HB 5364 which all aim to lower taxes on vape and heated tobacco products. Industry groups have claimed that high taxes are pushing consumers toward illicit cigarettes.

AER refuted this argument, saying the rise in illicit tobacco trade stems from weak enforcement and governance gaps, not from high tax rates.

This was affirmed in a recent study by the AER and John Hopkins Bloomberg School of Public Health that showed high tobacco taxes is not fueling illicit trade in the Philippines.

The report flagged Southern Mindanao, particularly Zamboanga City and General Santos, as a hotspot for illicit tobacco activity due to weak government enforcement.