What makes sense in principle may not always align with real-world results. This is certainly the case with the Philippine government’s strategy of progressively increasing taxes to raise the price of tobacco and vaping products.
At a recent Senate hearing on tobacco excise taxes, the mood among certain advocates was familiar: resolute, moral, and unwavering. Their argument leaned heavily on the familiar refrain: make harmful products unaffordable, and people will stop using them.
Their framing oversimplifies a far more complex problem. Across the world, countries that have leaned too hard on punitive taxation without strengthening regulatory and enforcement mechanisms have seen their strategies backfire.
Consumption doesn’t vanish, but migrates. Often, it goes underground.
Australia offers a striking case in point. With some of the highest tobacco taxes in the world, it was long held up as a model of what aggressive regulation could achieve. But cracks in the model are now impossible to ignore.
At the same Senate hearing, Rohan Pike, an Australian investigative consultant with 25 years of experience at the Australian Federal Police and Border Force, delivered a sobering account of what happens when tax policy overshoots its target.
“Australia’s policy mistakes should be a flashing red light for Philippine regulators. We’ve seen the chaos that follows when taxation overshoots its mark,” Pike warned. He described how Australia’s annual tax increases, meant to price tobacco and vaping products out of reach, have fueled a sprawling black market. Far from curbing demand, the policy has incentivized organized crime.
He added: “Turf wars among criminal gangs in Australia fighting over the huge profits from the lucrative illicit tobacco and vapes black market have sparked an unprecedented explosion of violence involving homicides, kidnappings, extortion, armed robberies, and arson attacks.”
The implications go beyond Australia or the Philippines. This is a global policy pattern repeating itself.
Against this backdrop, House Bill 11360 emerges as a welcome intervention. Rather than hiking rates, the bill aims to curb illicit tobacco trade by rationalizing the tax structure. It simplifies the excise regime for vaporized nicotine and non-nicotine products, and recalibrates the automatic increases on traditional tobacco products to a 2-4-2-4 percent scheme starting in 2026. This measured approach recognizes that predictability and clarity in tax policy can help stabilize the legal market and make enforcement more manageable.
By refining rather than merely escalating taxation, HB 11360 signals a shift toward smarter regulation. It implicitly acknowledges what international experience has shown: when legal markets are excessively burdened, they cede ground to illicit channels. The bill’s design may be a template for balancing revenue generation with the need to maintain a regulated alternative to the black market. In doing so, it also opens space for more serious conversations around harm reduction.
What’s more, vaping products, which some public health experts view as a potential harm-reduction tool, are now being lumped together with cigarettes in many countries’ tax policies. This one-size-fits-all approach erases the nuance between combustible and non-combustible products and risks driving vapers into illicit markets as well.
Pike’s recommendation to Philippine policymakers was pointed and pragmatic: set an appropriate tax rate, strengthen enforcement and prosecution, and consider tobacco harm reduction strategies. It’s a three-pronged approach rooted in operational experience, not ideology.
Your subscription could not be saved. Please try again.
Your subscription has been successful.
If the goal is fewer smokers and healthier communities, then tobacco control must evolve beyond punishment. It must start making sense in the real world, not just on paper.
