E-cigarette manufacturer backs ‘sin’ tax reform

Date Posted : February 3, 2020

E-cigarette manufacturer backs ‘sin’ tax reform

Date Posted : February 3, 2020

A major manufacturer of cartridge-based electronic cigarettes has committed to fully comply with a new law signed recently by President Duterte that will increase excise taxes on heated tobacco products (HTPs) and vapor (vaping) products, as well as with an upcoming health regulation banning the sale of flavored e-cigarettes in the market.

In a letter to Finance Secretary Carlos Dominguez III, JUUL Philippines also said it wants to contribute to the funding for the Universal Health Care (UHC) program by dutifully paying excise taxes due on its products “effective immediately.”

Under Republic Act (RA) No. 11346, which increased taxes on tobacco products and introduced a tax on e-cigarettes, the revenues collected will go to the UHC program.

A new sin tax reform law–RA No. 11467–signed by the President last Jan 22, raised taxes on alcohol products and imposed another round of increases in the taxes for e-cigarettes. RA 11467 also earmarks a substantial portion of revenues to UHC.

“JUUL Philippines fully supports the bicameral conference committee report.… on increasing excise tax for alcohol, Heated Tobacco Products and Vapor Products, which is now pending the signature of President Duterte. We share the view of the government that Vapor Products need to be responsibly regulated, and we commit to working with all our government agencies in ensuring faithful compliance to all laws governing this category,” said Mario Zinampan, the firm’s senior director for government affairs, in a letter to Dominguez sent before RA 11467 was signed into law.

Zinampan also said in his letter that JUUL has committed to immediately stop accepting orders from its local retail partners in the country for its JUUL pods with flavors such as mint, mango, and crème. He said the company will only accept orders for tobacco and menthol pods.

“We also committed to ceasing the sale of these JUUL pods through our Philippine e-commerce site (http://www.juul.ph). Finally, we committed to supporting the upcoming FDA (Food and Drug Administration) flavor policy in the Philippines and to complying with all regulations issued in this regard,” Zinampan said.

Zinampan said it has informed the FDA last Jan. 6. of JUUL’s commitment to comply with this upcoming regulation and welcomed FDA’s jurisdiction over vapor products.

While the firm has fully committed to support UHC by paying its taxes, it has, however, encountered delays in the importation of its products into the country as a result of the President’s pronouncement on the ban on e-cigarettes.

In his letter, Zinampan sought the assistance of the Department of Finance (DOF) in allowing JUUL to proceed with its importations, as he pointed out that RA 11346, which took effect starting Jan. 1 this year, “legitimizes vapor products in the Philippines.”

JUUL also requested to meet with Dominguez to clarify the issue.

JUUL products, made by JUUL Labs Inc. are battery-operated devices that look like computer flash drives and contain nicotine salts that do not produce vapor or visible emissions when they are used.

Under RA 11467, a tax of P37 per millimeter will be imposed on salt nicotine vapor products in the first year, and additional P5 per ml per year until the rate reaches P52 per ml in 2024. Thereafter, the tax will be increased by 5 percent every year.

HTPs will be taxed with new rates of P25 per pack in 2020, P27.50 in 2021, P30 in 2022, P32.50 in 2023, and 5 percent yearly thereafter.

A tax of P45 per 10 milliliter of conventional freebase vapor products will be imposed in 2020, P50 in 2021, P55 in 2022, P60 in 2023. Thereafter, the rate will increase by 5 percent every year.

The bill also imposes tax increases on alcohol products.


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Date Posted February 3, 2020

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