Philippine lawmakers are considering a two-year moratorium on annual tobacco excise tax hikes to stabilize tax collection and address the growing illicit cigarette trade.
The Department of Finance (DOF) supports a proposed two-year moratorium on the annual hikes in tobacco excise tax. House Committee Ways and Means Chair and Albay Rep. Joey Sarte Salceda said lawmakers are leaning toward recommending the suspension of the tobacco tax hikes to stabilize tax collection. The DOF and the Bureau of Internal Revenue (BIR) echoed this view, highlighting a significant decline in tobacco excise tax revenue—from P176 billion in 2021 to a projected P130.9 billion in 2024.
Revenues from tobacco incurred a downfall of 29 percent in 2024, which translates to P54.4 billion against target, said BIR Commissioner Romeo Lumagui Jr., pointing to the surge in illicit cigarette trade as a major factor behind the shortfall. DOF assistant secretary Karlo Fermin Adriano confirmed that the department has no objections to the proposal and are reviewing the optimal excise tax rate. The law mandates a 5-percent annual increase in cigarette excise tax. Salceda, however, suggested that the rate should instead increase by 6 percent every two years to reduce the growing prevalence of illicit cigarettes. Nueva Ecija 1st District Rep. Mikaela Angela Suansing said the growing market for illicit cigarettes since 2021 correlates with a cumulative revenue drop of P41 billion between 2021 and 2023. She argued that a moratorium would allow legitimate cigarettes to compete more effectively against illicit and electronic alternatives, preventing further price disparities. This moratorium will do a lot in terms of preventing the gap between the prices of manufactured and legitimate cigarettes versus the prices of illicit cigarettes. It is the gap in prices that is driving the shift from legally manufactured cigarettes to illicit cigarettes, Suansing said. Ilocos Sur 2nd District Re
ECONOMY TAXES TOBACCO ILLEGAL TRADE PHILIPPINES
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