Plugging loopholes and leakages

Less than two years after it took effect, Republic Act 11900, or the Vaporized Nicotine and Non-Nicotine Products Regulation Act, may already need a thorough review in order for our legislators to find out whether indeed there are serious flaws and loopholes in the law and in its implementation and enforcement.

The law mandates government to regulate the importation, assembly, manufacture, sale, packaging, distribution as well as the advertisement, promotion and sponsorship of vaporized nicotine and non-nicotine products in order to, among others, ensure that the sale to minors and the illicit trade of these products and their devices as well as those of novel tobacco products are prevented.

Late last year, the Bureau of Customs raided a warehouse in Valenzuela City that served as a storage facility for smuggled e-cigarettes and vape products of Flava Corp. The raid uncovered about 1.4 million pieces of illegally imported vape products.

Alarmed by this, the House Committee on Ways and Means conducted hearings in aid of legislation that centered on two issues, namely Flava’s illegal importation and misdeclaration of its products’ nicotine content.

Reporting the correct nicotine content is of course important since this would determine the amount of taxes and duties to be imposed on these importations. Part of these collections, in turn, are intended for the development of the public healthcare sector.

During the hearings, the BOC reported that the seized vaping products have a total dutiable value of about P728 million, with imposable excise taxes of P770 million and value-added taxes of P84 million.

It was also uncovered, after House Reps. Joey Salceda and Rufus Rodriguez inquired from the BOC and the Bureau of Internal Revenue about Flava’s import licenses, that Flava, while being a registered importer, did not register any products or brand for importation, making Flava’s importations all the more illegal.

However, on top of the technical smuggling accusations, social media is replete with reports that Flava has also committed flagrant violations of RA 11900.

Reports show that during the legislative deliberations for RA 11900, one of the concerns raised by health advocates is the danger of minors easily buying and getting addicted to e-cigarettes and vaping products.

To address this, Congress inserted stricter safeguards to ensure that minors will not be allowed to purchase e-cigarettes and vapes.

For instance, RA 11900 provides that retailers shall ensure that no individual below 18 years old is allowed to purchase vaporized nicotine and non-nicotine products, their devices, or novel tobacco products, and this prohibition extends to online selling through internet websites and e-commerce.

The sale, promotion, advertising, and product demonstration of these products within 100 meters from a school, playground, or other facility frequented by minors is also prohibited.

The law likewise states that advertisement of these products and other forms of consumer communication shall not be targeted to or particularly appeal to persons under 18 years of age. Markings or characters that are likely to appeal to the youth such as the use of cartoons, anime, youth influencers, personalities and the like are not allowed.

Section 12 provides that these communications shall not feature a minor and/or a celebrity or contain an endorsement by a celebrity whether express or implied and that manufacturers, importers, and sellers in their product advertisements are prohibited from contracting celebrities or health professionals to promote or encourage the use of these products.

RA 11900 also prohibits any posts, messages, or images depicting vaping or the use of these products as a lifestyle that is particularly attractive to minors, or promoting or encouraging vaping or use by non-smokers or minors.

Furthermore, the sale of these products that are packaged, labeled, presented, or marketed with flavor descriptors that are proven to unduly appeal particularly to minors shall be prohibited. A flavor descriptor is presumed to unduly appeal to minors if it includes a reference to a fruit, candy brand, dessert, or cartoon character.

Meanwhile, Section 14 of the law absolutely prohibits sponsorships in any sport, concert, cultural, or art event. For allowed sponsored events, persons below 18 are not allowed to participate. Merchandises such as t-shirts, carts, and other accessories with the name or logo of these vaping products cannot be distributed or sold in these sponsored events.

There are social media posts going viral showing that Flava products are being sold to minors, that the company has been using social media influencers and celebrities to promote the product, that the retailer/distributor has been coming out with advertisements and promotions that target minors, that there are no government health warnings on Flava’s promotional materials or online posts, that its importer/distributor has been sponsoring musical festivals and other events that are open to minors and that during these sponsored events promotion merchandise containing the name or logo or Flava are being offered.

There are also complaints that Flava has been using flavor descriptors for their flavors by referencing fruits, candy brands and desserts which is prohibited by law. One complaint states that Flava is deceiving regulators by mislabeling the flavor descriptors in their Romio products. This writer was furnished photos of Flava Romio products containing abstract flavor descriptors but the vaping device inside is labeled with fruit and candy flavor descriptors. One pack states outside the word “violet freeze” but inside, the product contains the word “grapes” which is a fruit descriptor. Another has a box that indicates that the product’s flavor is “green blush” but upon opening, the real flavor is “melon lychee” which is stated in a label attached to the device.

While the law is well meaning and replete with safeguards, these are not enough. Agencies like the Department of Trade Industry, BIR, BOC, and the Department of Finance should come together to put an end to practices such as these which not only endanger the youth but also jeopardize our government’s tax collection efforts.

With new Finance Secretary Ralph Recto announcing that government is veering away from creating new and additional taxes and instead wants to focus on improving tax collection efforts, then plugging the loopholes in the law, reducing smuggling, better monitoring, and disciplining unscrupulous industry players such as Flava to serve as an example and warning to other should be priority.

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