Government losing P5 billion in taxes from vape smuggling, illegal sale

MANILA, Philippines — The government is losing at least P5 billion in revenues from the continued smuggling and illegal selling of vape products.

Consumer group Bantay Konsyumer, Kalsada, Kuryente (BK3) raised the concern of smuggling of vape products. It is estimated that Philippine consumption of vape is now at P13 billion.

“Given those figures, the Philippines is supposed to collect more than P5 billion in taxes but the Bureau of Internal Revenue’s collection only reached P138 million,” BK3 convenor Karry Sison said.

“This shows further how vape products are able to enter the market without being subjected to the appropriate tariffs and taxes to the detriment of our economy,” she said.

The BIR has already admitted that the increasing use of vape products is one of the reasons why excise tax collections for tobacco have been on a decline.

This as many consumers have shifted to vape products and BIR have difficulties in going after illegal ones given that it has become a backyard industry whose production can be done even at home.

For now, the government is cracking down on the illegal sale and smuggling of vape products through mandatory testing and registration as well as the imposition of excise stamps.

A recent survey by Pulse Asia also revealed that most Filipinos are aware of the  illegal sale of cigarette and vape products in the country.

The survey showed that consumers are drawn to illegal cigarette products primarily due to their cheap prices at P30 per pack as compared to P120 per pack for the legitimate ones.

Such a price is way below the excise tax of P63 per pack that the government collects from legitimate tobacco players.

Local think tank Minimal Government Thinkers and the Department of Trade and Industry (DTI) are in agreement that there is no need to raise taxes at this point.

DTI noted that hiking taxes will not invite non-taxpayers to pay and is a move that effectively punishes those who are properly paying their obligations.

Further, Minimal Government Thinkers said tax increases will only result in more business for smugglers and illegal sellers that offer an alternative.

“High tobacco taxation to reduce smoking is a false and failed narrative. More smoking happens because people shift to the illicit,” it said.