House Approves Bill to Lower Excise Tax on Cigarettes, Vape Products

MANILA – The House of Representatives has approved a bill lowering excise tax rates on cigarettes, tobacco, and vape products, aiming to curb the decline in tax collection and address the rise in illicit cigarette trade.

House Bill 11360 was passed via viva voce voting in the early hours of January 29, 2025, following an extended session.

Key Provisions of the Bill

✅ The current excise tax rate of ₱66.15 per pack of cigarettes will increase:

• By 2% every even-numbered year starting 2026
• By 4% every odd-numbered year starting 2027 until 2035
• A similar scheme will apply to heated tobacco, vapor, and e-cigarette products

✅ The President, upon recommendation from the Finance Secretary, may increase the tax rate by up to 5% if the national deficit exceeds 2% of GDP.

✅ A minimum pricing system for cigarettes will be set, ensuring retail prices reflect taxes, production costs, and trade margins.

Addressing Illicit Cigarette Trade

House Ways and Means Committee Chair Joey Salceda argued that the high tax rates on cigarettes led to a surge in illicit trade, with the underground market doubling from 5.3% in 2020 to 13.2% in 2023.

“While higher taxes on sin products are justified, they have unintentionally fueled illicit trade due to lower entry costs and affordability,” Salceda explained.

By reducing the tax rate increase, the bill aims to narrow the price gap between legitimate and illicit cigarettes, encouraging smokers to buy legally taxed products.

Unitary Tax for Vape Products

✅ A flat excise tax of ₱66.15 per milliliter will apply to all vapor products, regardless of nicotine content.
✅ This covers both nicotine-free liquids and those with nicotine salts or freebase nicotine.

What’s Next?

With only one week left before Congress adjourns on February 7, lawmakers must approve the bill on third and final reading. If passed, it will head to the Senate for further deliberation.