Senator wants harmonized tax rates on vapes – BusinessWorld Online
A SENATOR on Monday said that tax rates for vape and nicotine products should not be lowered in an attempt to curb smuggling, recommending instead that its taxes be harmonized.
The government should also look at stepping up enforcement against illegal vapes by incentivizing law enforcement agencies to boost seizures and tapping local governments to combat smuggled goods more effectively, Senator Sherwin T. Gatchalian told the Senate ways and means panel.
“The solution to curb illicit trade will not come from the reduction of taxes. It will come from strengthening our enforcement,” said Mr. Gatchalian, who heads the Senate tax committee.
“Part of our recommendations is to impose a single tax rate on vapor products, meaning free-base and nicotine salt, and also impose ad valorem on vaping devices,” he added.
The Senate tax panel met on Monday to discuss a proposal that seeks to implement an alternating scheme that will impose a 2% rate every even-numbered year, and 4% every odd-numbered year. The measure passed the House of Representatives in February.
Lawmakers who advocated for its approval argued that shifting to an alternating 2% and 4% tax hike from the current flat 5% annual increase would encourage vape smugglers to register with the government instead.
“We will come up with a single tax rate on vapor products and impose an ad valorem tax on devices so that we can curb the increase or hopefully eliminate the increase in the use of vape products,” Mr. Gatchalian said.
About 80% of all vape products currently available in the market are either illegally manufactured or smuggled into the country, Glenn Marvin See, vice-president of vape company Aerogin Consumer Electronics Trading Corp. told the Senate tax panel.
Leveling the tax rates of free-base and salt nicotine products would harm legal vape shops, he added.
“It’s going to wipe out our sales, because as it is right now, we’re having a hard time competing with illicit products,” said Mr. See. — Kenneth Christiane L. Basilio
