FILIPINO legislators are advancing a measure to consolidate vapor product taxes, aiming to plug revenue gaps worth billions of pesos.
Supported by over 40 members of Congress, including Deputy Speaker Kristine Singson-Meehan and four other authors of similar bills, House Bill 5207 aims to eliminate the uneven taxation of nicotine salt and freebase nicotine.
Proponents warn that the steep tax imbalance—₱60.20per milliliter for nicotine salt compared to just ₱6.95 for freebase nicotine—creates strong incentives for misdeclaration and tax evasion.
The measure aims to plug loopholes by raising taxes on freebase nicotine products, thereby aligning them more closely with nicotine salt taxation.
“All told, this bill seeks to lessen the burden on the legitimate businesses, level the playing field, discourage illegal trading practices that expose consumers to unregulated products and ensure fair competition in the market,” the authors of the bill said.
According to proponents, the 900 percent price gap has produced a “tax leakage,” with importers misdeclaringnicotine salts as freebase nicotine. Senate Ways and Means Committee chair Win Gatchalian previously estimated the loophole’s fiscal impact at ₱14.8 billion per year.
A 2024 directive requires internal revenue stamps on all vape products, yet enforcement gaps allow non-compliant items to persist. The measure underscores that illicit traders misdeclare salt nicotine as freebase nicotine, exploiting limited government testing capacity to evade higher taxation.
Bureau of Internal Revenue (BIR) data shows a sharp increase in reported vapor product withdrawals, but excise collections have lagged. The average levy per milliliter declined from ₱42.00 in 2021 to ₱9.00 in 2025, implying that most items are assessed at freebase rates.
Economists and industry stakeholders argue that HB 5207 would standardize Philippine taxation in line with international and Asian standards by applying a single rate to vapor products. The measure is also expected to rationalize administration and foster compliance.
Bienvenido Oplas Jr., president of Minimal Government Thinkers and international fellow at the Tholos Foundation in Washington D.C., endorsed HB 5207. He argued that a single tax rate would deliver four key benefits: simplified administration, elimination of loopholes and arbitrary classifications, alignment with global standards, and consistency with the relative harm of vapor products.
“Risk-proportionate taxation is to incentivize switching to less harmful products, for those who cannot quit smoking,” said Oplas.
In a related development, Philippine E-cigarette Industry Association (PECIA) president Joey Dulay argued that excise duties should be limited to consumable components of vapor products and exclude delivery devices.
“While we advocate for a unified tax structure across freebase and nicotine salt liquids, we believe that imposing taxes on vaping hardware undermines the principles of harm reduction,” Dulay said.
“The hardware, which consists of the heating device, chargers and cables, does not warrant a specialized tax. Since the consumables are already subject to duty, taxing the device itself constitutes an unfair double taxation on the end-user,” Dulay added.
“To remain consistent with public health goals, taxation should reflect the relative risk of the product; therefore, vapor products should be taxed significantly lower than traditional cigarettes,” he said.
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