THE Bureau of Internal Revenue (BIR) has called for higher taxes on vapor products, warning that taxing them less than cigarettes would lead to significant revenue losses for the government.

“We wish to maintain that cigarette products and heated tobacco products should be taxed at the same rate, your honor,” said BIR Large Taxpayers Service Assistant Commissioner Atty. Jethro Sabariaga during the fourth Senate hearing on House Bill 11360.

“But with regard to the vapor products, we share the same observation with the Department of Finance that it should not be lower than traditional tobacco. But, in fact, [we] proposed that it should be higher because one vapor product is not the same as consumption of one pack of cigarettes.”

Sabariaga pointed out that one vape product contains more puffs than a pack of cigarettes, making current rates inequitable.

According to the lawyer-accountant, “one pack of cigarettes can be consumed in 300 puffs. The market shows that the lowest number of puffs you can consume on one vape product is 600 puffs, as per the representation also and their labelling. So, there’s a non-parity… from a revenue perspective, the revenue agency will be or the government will be losing a lot based on the consumption of these products.”

Sabariaga also stressed the consequences of reduced tax rates for vape products. “From a revenue perspective,” said the BIR official, “the government will be losing a lot based on the consumption of these products because these products will be consumed [for] a longer time than one cigarette product.”

The DOF echoed a similar position. DOF Director Maria Carla Espinosa said that “the DOF indeed supports a unitary specific tax rate for all vapor products. This is to improve efficiency in tax collections and to encourage increase in tax compliance.”

Senator Win Gatchalian, who chairs the Senate Committee on Ways and Means, also said that it is time to raise the taxes on vape products, especially given the public health threats posed by vapes.

“Because of the huge difference between nicotine salt, as well as freebase products. We are seeing technical smuggling happening in our country because it is very cheap. Or it’s cheaper to import freebase, almost ten times cheaper,” revealed the senator.

“We have seen an increase and an uptick of vape products by the younger group, or the younger segment of our population—particularly the adolescents. That’s why part of our recommendations is to impose a single tax rate on vapor products, meaning freebase and nicotine salt. And also impose ad valorem on vaping devices. This is a global practice,” said Gatchalian.

“In fact, I remember one of our resource persons mentioned that the Philippines is the only country in the whole world imposing a two-tier tax system on vape products. In fact, our team also reviewed [this and found that] we are indeed the only country in the whole world.”

The BIR has reported higher collections from vape products following tighter enforcement using its stamp system. In 2023, only 11.2 million milliliters of vape liquids were taxed, resulting in ₱223.75 million in excise taxes. But after the implementation of the BIR’s vape stamp system in June 2024, collections jumped to ₱942 million from 130 million milliliters in just one year.