House OKs rationalized excise tax on tobacco and vape products

The House of Representatives has approved on final reading a bill aiming to rationalize excise tax rates on tobacco and vape products, passing House Bill 11360 with a 190-4 vote.

The bill amends the National Internal Revenue Code, stipulating a 2 percent increase in excise tax rates on tobacco products every even-numbered year and a 4 percent increase every odd-numbered year, starting January 1, 2026, until December 31, 2035.

This represents a reduction from the current fixed 5 percent annual increase.

Specific excise taxes are set at PHP41 per pack for heated tobacco products and PHP66.15 per pack for cigarettes and vape products.

The Department of Finance and the Bureau of Internal Revenue are tasked with setting removal thresholds to prevent frontloading of products.

The President, upon recommendation of the DOF secretary, is authorized to increase the tax rate by up to 5 percent if the national government deficit exceeds its target by 2 percent.

A comprehensive review of the tax rates and their effects will be conducted after ten years.

The proposed measure is projected to achieve an aggregate revenue recovery of PHP66 billion over five years.