Philippine lawmakers are pushing for a temporary halt to annual cigarette and tobacco tax increases, citing the growing problem of illicit trade and its impact on government revenue. The House Committee on Ways and Means is considering a moratorium on tax hikes for 2026, with rates resuming their regular increments in 2027. Concerns over the surge in contraband cigarettes, estimated to have cost the government up to P129 billion in recent years, and the rise in smoking prevalence, particularly due to vaping, are driving the proposal.
LAWMAKERS are advocating a temporary suspension of annual tax hikes on cigarettes and other tobacco products, citing concerns over the rise of illicit trade and its economic impact.
Under the proposal, the tax rates would resume their regular increments starting in January 2027, increasing by 4 percent to 5 percent triennially or every three years thereafter. Salceda also referenced the findings of the National Nutrition Survey, which reported a 5-percent increase in smoking prevalence between 2021 and 2023. The rise is attributed primarily to increased vaping, though a slight uptick in adult smoking was also noted.
“My professional opinion as an economist is that there has been a shift from licit to illicit cigarettes due to the large price differential caused partly by taxes,” Salceda said. Salceda called on the Department of Finance to present its official position on the matter, as it is the primary agency responsible for implementing the country’s tax policies.
Illicit Trade Tobacco Taxes Cigarette Prices Government Revenue Smoking Prevalence
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