Illegal vape trade adds woes to tobacco farmers

On Apr 14, 2024

The Bureau of Internal Revenue confiscated 102,900 bottles of vape products and arrested two individuals during a raid of a warehouse in San Pablo City, Laguna on March 11, 2024. The total tax deficiency was estimated at P75.7 million. (BIR Photo)

The Philippine Tobacco Growers Association (PTGA) and the National Federation of Tobacco Farmers Association and Cooperatives (NAFTAC) are calling for the strict enforcement of the Vaporized Nicotine and Non-Nicotine Products Regulation Act amid the proliferation of illegal vapes and disposable vapes in the market.

Saturnino Distor, PTGA president, said as it is, tobacco farmers are reeling from the proliferation of illicit cigarettes which has reduced demand for locally produced tobacco leaf among domestic manufacturers.

Distor said illegal vape further endangers the livelihood of thousands of Filipinos who rely on the tobacco industry for sustenance since these are replacing legal and tax-paid cigarettes as well.

Citing data from the National Tobacco Administration, there are 2.2 million Filipinos who are financially dependent on tobacco including more than 430,000 farmers, farm workers and their family members.

“Unlike heated tobacco sticks, vapes do not contain dried tobacco leaves and have no direct benefit to tobacco farmers. Illegal vapes only benefit smugglers and crooked retailers since they don’t even pay taxes. We need the help of the government to stop this ‘vapedemic’ and save the local tobacco industry,” Distor added.

Bernard Vicente, NAFTAC chairman, said the vape law meant to regulate cigarette alternatives such as vapes and heated tobacco products and promote the utilization of local tobacco “is now being abused by unscrupulous businessmen who are blatantly smuggling and distributing illegal vapes.”

Vicente further said illegal vapes are killing farmers’ livelihoods in many ways especially with the drop in demand for locally produced tobacco leaf as consumers switch to vapes from conventional cigarettes.

The NAFTAC chairman added the entry of illegal vape also diminish the support to local government units in tobacco-producing regions which receive a share of tobacco excise taxes.

Tobacco excise taxes are allocated for Philhealth with a 40 percent share and another 10 percent to Department of Health’s health facilities enhancement program with the remainder of the share going to the national budget and tobacco-producing provinces to support tobacco farmers.

During hearings led by Rep. Joey Salceda of the Ways and Means Committee of the House of Representatives estimated the government is losing at least P5 billion in excise taxes annually due to illegal e-cigarettes, on top of the estimated P60 billion in taxes lost yearly to illicit cigarettes.

Stakeholders also attributed the drop in excise tax collections to smuggling and distribution of illegal cigarettes and vapes.

From a record collection of P176 billion in 2021, tobacco excise taxes fell for the first time to P160 billion in 2022. For 2023, the BIR reported a 16 percent drop in excise tax collections to P135 billion which is well below the P170 billion target for the year.