Tobacco-producing LGUs to get P15.8B in shares from 2016 excise taxes

by Ben O. de Vera, Philippine Daily Inquirer, Jun 18, 2019

MANILA, Philippines — Tobacco-producing local government units (LGUs) will receive a total of P15.8 billion in shares from cigarette excise taxes collected in 2016.

Local Budget Memorandum No. 79 issued by Department of Budget and Management (DBM) Officer-in-Charge Janet B. Abuel on June 14 showed that the shares included P12.9 billion in excise taxes slapped on locally manufactured Virginia-type cigarettes.

Another P2.9 billion came from excise taxes on burley and native tobacco.

The releases will be chargeable against the 2018 national budget.

Across five provinces that produce Virginia-type cigarettes, Ilocos Sur accounted for the bulk or 59.6 percent of total production in 2016, hence will get the same share or P7.7 billion from that year’s excise tax collections to be divided among 34 cities and municipalities.

In Abra, 27 municipalities will divide among themselves P1.9 billion; 23 cities and municipalities in Ilocos Norte will get P1.1 billion; one city and 19 municipalities in La Union, P1.4 billion; and 26 cities and municipalities in Misamis Oriental, P775.5 million.

As for 14 provinces that produce burley and native tobacco excise tax, they will get P2.9 billion in shares from excise taxes.

The 14 provinces were Abra, Cagayan, Ilocos Norte, Ilocos Sur, Isabela, Kalinga, La Union, Maguindanao, Misamis Oriental, North Cotabato, Nueva Vizcaya, Occidental Mindoro, Pangasinan, and Tarlac.

Under Republic Act (RA) No. 7171, LGUs that manufacture Virginia-type cigarettes get a 15-percent share of national tax collections, of which provincial governments will receive 30 percent; congressional districts will also get 30 percent; while cities and municipalities are the recipients of the remaining 40 percent.

But since the Supreme Court had declared legislators’ so-called “pork barrel” as well as interventions in budget implementation as unconstitutional – hence, prohibited – the releases from collections coming from Virginia tobacco will be distributed only to provincial, city, and municipal governments.

Separately, RA 8240 mandated provinces as well as cities and municipalities to receive their respective shares of 10 percent and 90 percent from 15 percent of total excise taxes collected from burley and native tobacco.

LGUs’ shares from tobacco excise taxes must be spent on programs and projects that will advance self-reliance of tobacco farmers as well as agro-industrial, cooperative, infrastructure, and livelihood projects benefitting them.