PTI calls for tobacco tax reform to curb illicit market growth

The Philippine Tobacco Institute (PTI) has called for an overhaul of tobacco taxes to address the growing market share of illicit tobacco and ensure adequate sin tax collection.

Illicit tobacco now accounts for about 18.2% of the market, up from 5.4% in 2020, making legal products less affordable compared to untaxed varieties.

PTI President Jericho B. Nograles said that annual tax hikes have failed to reduce smoking and have instead led consumers to switch to cheaper illicit cigarettes, causing a decline in government revenue by over P40 billion from 2021 to 2024.

The Bureau of Internal Revenue reported a decline in tobacco tax collection to P134.43 billion last year from P176 billion in 2021, while the Department of Finance estimates that the illicit trade costs the government P52 billion annually.

PTI recommends calibrating tax rates and enhancing enforcement efforts to fully realize the benefits of the Sin Tax Law for public health and government revenue.