TOBACCO FARMERS should finally be able to benefit from tobacco excise tax collections, as Congress has clarified the areas that are to benefit from these funds.
Full implementation of the 12-year-old law concerned, which amended provisions of the National Internal Revenue Code on excise 
taxes slapped on alcohol and tobacco products, had been stalled due to a lack of clear definition of the term, “province.”
Resolution No. 20, approved two weeks ago by the Congressional Oversight Committee on Comprehensive Tax Reform Program, defined the term, “province,” as local government units (LGUs) where the burley and native tobacco are produced,”be it consisting of provinces, cities, and/or municipalities, as well as legislative districts.”
The committee, which consists of the ways and means committees of the House of Representatives and the Senate, said this definition is consistent with the intent of the Republic Act (RA) 8240, which took effect on Jan. 1, 1997.
Section 8 of that law provides that 15% of the incremental revenue collected from tobacco excise tax should “be allocated and divided among the provinces producing burley and native tobacco in accordance with the volume of tobacco leaf production” for cooperative, livelihood and agro-industrial projects that will “increase income and productivity of farmers.”
Hence, the law did not specify smaller units like municipalities and cities.
Consequently, the Budget and Finance departments have been cautious about releasing the funds to avoid channeling money to provinces that are not supposed to receive them.
This, along with the delay in the creation of a congressional oversight panel that will monitor agencies’ compliance, delayed the full execution of the law.
“The Oversight Committee considers it but just that the share of the producing LGUs from the fund be allocated and directly conveyed to them since this is the true intent of RA 8240,” the resolution read.
“The Oversight Committee has deemed it necessary to clarify the meaning of the term, ‘provinces,’ as used in the law for the purpose of ensuring uniformity and consistency with all the executive issuances that will be released.”
P6 billion owed to farmers
In March, Congress formed a technical working group to clarify the definition.
The output of the group, which consisted of representatives of the Finance and Budget departments, the Bureau of Internal Revenue (BIR), and the National Tobacco Administration (NTA), became the basis of Resolution 20.
Pangasinan Rep. Mark O. Cojuangco, who pushed for the approval of the resolution, said the government owes around P6 billion to tobacco farmers due to the delayed full implementation of RA 8240.
“The government owes P6 billion more or less [to the farmers]. If they cannot give the amount in lump sum, one of the options is to disburse the funds for a period of seven years,” he said in a recent interview.
“A lot of local units are interested to shift to other industries. Some say the tobacco industry is a sunset industry. These funds will be used for them to retool their farming practices to enter new markets; or for those who really want to go tobacco, they can use these to be more competitive.”
He said the clarification should also help prevent diversion of funds to projects not related to tobacco production.
Among the provinces that are expected to benefit are Pangasinan, Tarlac, Nueva Ecija, Iloilo, Leyte, Ifugao, Negros Oriental, Cebu, Saranggani, South Cotabato and Maguindanao.
“Finally, these areas will get justice,” Mr. Cojuangco said.
Budget department Director Carmencita N. Delantar said the department will fast-track the drafting of the procedures that will govern the disbursement of the funds.
“We have been waiting for this [clarification]…We can integrate this in the implementing rules,” she said in a separate interview.
The Oversight Committee has directed the Budget department to submit the implementing rules in its meeting next month.
BIR data showed that collections from the excise tax on tobacco amounted P27.352 billion in 2008 from P23.2 billion in 2007.
Latest figures from NTA, on the other hand, showed that trading centers bought a total of 41 million kilos of locally grown leaf tobacco with a farmgate value of P1.95 billion in 2007.
Around 23.24 million kilos of these were Virginia leaf, while 8.22 million were burley leaf. The rest were native and dark leaf tobacco which totaled 9.6 million kilos.
Tobacco is an annual or bi-annual growing 1-3 meters tall with large sticky leaves that contain nicotine. Native to the Americas, tobacco has a long history of use as a shamanic inebriant and stimulant. It is extremely popular and well-known for its addictive potential.
Nicotiana rustica leaves.
Nicotiana rustica leaves have a nicotine content as high as 9%, whereas Nicotiana tabacum (common tobacco) leaves contain about 1 to 3%
A cigar is a tightly rolled bundle of dried and fermented tobacco which is ignited so that its smoke may be drawn into the mouth. Cigar tobacco is grown in significant quantities in Brazil, Cameroon, Cuba, Dominican Republic, Honduras, Indonesia, Mexico, Nicaragua, Sumatra, Philippines, and the Eastern United States.
Tobacco is an agricultural product processed from the fresh leaves of plants in the genus Nicotiana. It can be consumed, used as an organic pesticide, and in the form of nicotine tartrate it is used in some medicines. In consumption it may be in the form of cigarettes smoking, snuffing, chewing, dipping tobacco, or snus.
