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Juul Labs opposes higher tax on e-cigarettes

US-based electronic cigarette manufacturer Juul Labs Inc. expressed its opposition to the proposal in Congress to increase the excise taxes on electronic nicotine delivery system, or vapor products, saying it may kill the category and result in illicit trade.

Juul said in its comments to House Bill 1026 that it was opposing the timing of the new proposed increase as it has been operating in the country for only two months.

“Taxing us at this point with a proposed 200-percent hike is onerous as it might just kill the category. As such there is nothing to tax and no revenues collected,” Juul said.

The House of Representatives after a week of deliberations swiftly passed House Bill 1026 on Aug. 20, 2019. The bill which originally intended to raise the excise tax on alcohol products, but its committee report was amended on the floor to include, among others, a provision mandating an increase in excise tax on electronic nicotine delivery system/vapor products.

This came less than a month after Republic Act 11346 was signed into law on July 25, 2019, which imposed the excise tax on ENDS for the first time. The provisions of the new law are supposed to be implemented by Jan. 1, 2020.

House Bill 1026 proposed an increase in the excise tax on heated tobacco or e-cigarettes to P45 per pack in 2020 and an incremental increase of P5 per pack per year, on par with regular cigarettes.  The tax on vapor products with nicotine salts would be increased to P30 from the current P10 per milliliter, with an incremental P5 yearly increase to P45 by 2023.

The Finance Department said the excise tax increase on alcohol and e-cigarettes would generate around P52 billion while HB 1026 was expected to generate P33.3 billion by 2020.

Juul said the excise tax rate should be proportional to harm posed by ENDS or e-cigarettes compared to combustible or traditional cigarettes.

Juul cited many countries that implemented the strictest anti-tobacco control measures recognized the harm reduction capacity of these products. Juul mentioned Canada, which previously banned ENDS, but reversed course and now regulates these products commercially.

Meanwhile, the UK’s Public Health England reviewed British and international studies on ENDS in 2014 and 2018, concluding that e-cigarettes were 95-percent less harmful than smoking.

Dr. Tikki Pang, a Malaysian scientist who worked for more than a decade at the World Health Organization, said in a briefing in Manila Tuesday evening that as these studies found that e-cigarettes were 95 percent less harmful than combustible cigarettes, then its taxation should also be “95 percent less than cigarettes.”

“That is the principle. If taxes on these products are higher, these will not be affordable and people will still go to smoking cigarettes…This is something that must be negotiated. Not making taxes so high… so it will not be a target for people doing counterfeit products,” Pang said.

“Vapes’ taxes should be lower than cigarettes based on my personal assessment. E-cigarettes are less harmful than combustible cigarettes,” Pang said.

Pang said that denying smokers of these kinds of products that were found to be less harmful than combustible cigarettes was a form of “human rights violation.”

Topics: Juul Labs Inc. , e-cigarettes , excise taxes , electronic nicotine delivery system

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