Senate President Sherwin Gatchalian is looking to raise taxes on vaping products and develop a Philippine version of a wealth tax to offset revenue losses from a proposed repeal of the travel tax while supporting economic growth.
Speaking on the sidelines of the Management Association of the Philippines’ General Membership Meeting, Gatchalian said the Senate is targeting passage this year of a measure exempting travelers from the tax, which has already cleared the House of Representatives.
The repeal could cost the government about P6 billion in annual revenues, but Gatchalian said the economic benefits from increased tourism could make up for the loss.
“We think that it will be offset by the growth in the tourism industry,” Gatchalian said, adding that the Senate would examine alternative revenue sources before approving the tax relief.
One option is a higher excise tax on vaping products, with Gatchalian saying rates should at least match those imposed on cigarettes as the government seeks to curb rising vape use among young people.
“We will increase the taxes on vaping because we’ve seen that many kids are getting into vaping,” he said. “The target is at least equal to cigarettes.”
Gatchalian said amendments to the sin tax law are also targeted for passage this year.
The Senate is separately studying ways to expand taxation of wealthier Filipinos, potentially through a Philippine version of a wealth tax.
Gatchalian said affluent Filipinos already pay taxes through levies on luxury goods, real estate, assets, and certain services, but lawmakers are exploring additional approaches.
“We’re looking at other ways to come up with our own version of a wealth tax,” he said, stressing that the proposals remain under study.
The tax measures reflect the Senate’s attempt to balance revenue generation with policies aimed at stimulating economic activity.
Gatchalian said the approach is to remove taxes that could restrain sectors such as tourism while identifying revenue sources that can help replace collections and strengthen fiscal space.
The proposed travel tax repeal, higher vape taxes, and possible wealth-tax measures will therefore form part of a broader effort to reshape the tax mix without compromising the government’s ability to fund public services and development programs.
