An Act Increasing Excise Tax on Tobacco Products, Heated Tobacco Products and Vapor Products

Case Overview and Summary

Summary of the Law:

Excise Tax on Tobacco Products, Heated Tobacco Products, and Vapor Products
- Imposes excise tax on heated tobacco products at P10 per pack of 20 units effective January 1, 2020, with a 5% annual increase starting January 1, 2021. (Section 2)
- Imposes excise tax on vapor products based on volume, ranging from P10 for 0-10ml to P50 plus P10 for every additional 10ml over 50ml, effective January 1, 2020, with a 5% annual increase starting January 1, 2021. (Section 2)
- Defines "heated tobacco products" and "vapor products". (Section 5)

Excise Tax on Cigars and Cigarettes
- Increases excise tax on cigars by 5% annually starting January 1, 2024. (Section 3)
- Increases excise tax on cigarettes packed by hand and machine to P45 per pack effective January 1, 2020, with annual increases until reaching P60 per pack in 2023, and 5% annual increases starting January 1, 2024. (Section 3)
- Prohibits selling tobacco products at a price lower than the combined excise and value-added taxes, with penalties. (Section 3)

Penalties and Offenses
- Increases penalties for unlawful possession or removal of articles subject to excise tax without payment. (Section 10)
- Introduces penalties for selling heated tobacco products and vapor products at a price lower than the combined excise and value-added taxes. (Section 11)
- Increases penalties for offenses relating to tax stamps. (Section 12)
- Introduces penalties for violations by manufacturers, importers, and sellers of cigarette paper and related products. (Section 13)

Disposition of Tax Revenues
- Allocates 50% of excise tax revenue from sugar-sweetened beverages, with 80% for universal health care and 20% for medical assistance and health facilities. (Section 14)
- Allocates 50% of excise tax revenue from alcohol products, with 80% for universal health care and 20% for medical assistance and health facilities. (Section 14)
- Allocates excise tax revenue from tobacco products, with 5% (up to P4 billion) for programs to promote alternatives for tobacco farmers, 50% for universal health care (80%) and medical assistance (20%), and 15% (up to P17 billion) for support to Virginia tobacco-producing provinces. (Sections 14, 16)
- Allocates excise tax revenue from heated tobacco products and vapor products, with 80% for universal health care and 20% for medical assistance and health facilities. (Section 14)

Other Provisions
- Authorizes the Bureau of Internal Revenue to supervise establishments producing articles subject to excise tax and appoint third parties to monitor production and removal processes. (Section 6)
- Requires manufacturers, importers, and sellers of cigarette paper and related products to obtain permits and maintain records. (Section 7)
- Repeals Section 8 of Republic Act No. 8240 and other inconsistent laws. (Section 18)