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Senate needs more convincing on e-cigarette firms’ bid for separate tax

senate needs more convincing on e cigarette firms bid for separate tax 816x445 - Senate needs more convincing on e-cigarette firms’ bid for separate tax

THE SENATE ways and means committee may still decide to tax electronic cigarettes at par with traditional tobacco products, depending on the findings that emerge about the products’ health risks, its chairman Senator Pilar Juliana S. Cayetano said.

JUUL Labs Inc. on Wednesday argued that its products should be taxed differently from e-cigarettes, because they are a “healthier” product that helps smokers quit tobacco. Ms. Cayetano replied that these claims need to be backed by more studies.

“What I’m very vocal about is that there clearly are still health risks. It’s not correct to say that there are no health risks. If there are health risks, would it be correct to lower the tax?” Ms. Cayetano told BusinessWorld in a chance interview Thursday.

“I do agree that more research needs to be done, so if I have to veer on the side of caution, then it’s not so simple to say — reduced harm (warrants) lower taxes.”

The World Health Organization (WHO) calls the electronic cigarettes category “Electronic Nicotine Delivery Systems and Electronic Non-Nicotine Delivery Systems (ENDS/ENNDS)

JUUL Labs Asia Pacific President Kenneth Bishop said during the hearing on the proposed excise tax increase on ENDS/ENNDS, “We believe we should have a relative tax difference to cigarettes.”

The proposal forms part of the comprehensive tax reform program’s package two plus, which will increase excise tax on alcohol products, e-cigarettes and vapor products.

When asked if the committee can still meet its September target for the committee report, Ms. Cayetano said “kaya naman, depends on kung ano ‘yung recommendation ng DoF (Department of Finance) (It depends on what the DoF recommends).”

“If the recommendation of the DoF is similar to my direction and the feedback I’ve been receiving, then its possible.” Ms. Cayetano and the DoF will be meeting on Sept. 13 to discuss the recomputation of rates for the alcohol products.

Senate Bill No. 987 proposed to increase rates to P45 per pack of heated tobacco products and per milliliter of vapor products beginning in 2020. This is to increase by P5 per year until it hits P60 in 2023; and by 5% every year thereafter.

The proposal will also impose a 20% excise tax on e-cigarette devices based on the wholesale price or the value of importation. The bill incorporates proposals put forward by the Department of Finance and Department of Health.

“Tobacco is still the leading cause of disease and after years and years of tobacco control efforts it is still a problem. There are still 1 billion smokers around the world, and 16 million smokers in the Philippines. We are not a tobacco company, we are a technology company that wants to solve this problem,” Mr. Bishop said.

JUUL Labs Inc. said before further increasing taxes, the government should first implement Republic Act No. 11346, signed on July 25.

The Law increased excise tax on tobacco products to P60 per pack by 2023 from P35 currently and introduced a graduated rate on vapor products, from as low as P10 on 10 milliliter (ml) vapor products, P20 on 20 ml, and so on.

“We request that you implement RA 11346 before any additional taxes are levied. We believe we need further evidence and further debate before we act further,” Mr. Bishop said.

“We would ask that in new legislation we focus on tax only. We would ask that there is no tax on the device and we would ask that there’s no discrimination between the two types of nicotines.” — Charmaine A. Tadalan

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