COA questions Abra’s use of tobacco excise tax share

The Commission on Audit (COA) has found lapses in the disbursement by Abra province of its share from the tobacco excise tax, noting, among others, that tobacco farmers’ groups were not given priority in the use of the fund.

The COA said P3 million from the tobacco excise tax was intended for financial assistance to Abra farmers in 2010. Of this amount, P2.7 million was distributed to various groups.

Abra has 43 registered tobacco farmers; organizations, but only two beneficiaries of the financial assistance were registered as tobacco farmers’ groups. Under the law, these registered groups should have been the fund’s primary beneficiaries, the COA said.
The province’s share from the excise tax is meant to help farmers in tobacco-producing provinces to become more self-reliant, as provided for under Republic Act No. 7171.

“Since RA 7171 was enacted purposely to advance the self-reliance of the tobacco farmers, these tobacco farmer’s organizations should have been given priority in the utilization of the fund,” the COA said.
It also questioned the legality and propriety of transactions funded by Abra’s share from the tobacco excise tax since the implementation of projects did not conform with the rules.

It said projects were not supported by proper documentation. For instance, P17.2 million worth of projects funded by the tobacco tax had no attached list of beneficiaries signed by the recipients of the projects.
The projects involved the procurement of water pumps, construction materials, fertilizer, hand tractors and sprayers.
“As a result, we were not able to confirm receipt of items reportedly distributed to tobacco farmers and whether the objectives of RA 7171 have been attained,” it said.

The COA further said that the purpose of the P1.98 million worth of cement and construction materials purchased was not even indicated. There was also no program of work and approved budget of the contract.
“The absence of indicated purpose hampered further verification and possible validation of its implementation,” it said.
The province failed to maintain a special account and separate depository account for its share from the tobacco excise tax, as required under the law, according to the COA.

Because of this, access to financial information and effective monitoring of the implementation of the fund’s purpose was difficult, it said.
“The creation of such special account solely for the share from tobacco excise tax will provide easier access to financial information to facilitate faster and more effective monitoring of the status of implementation and utilization of such fund,” it said.
Under RA 7171, tobacco-producing provinces get 15 percent of the excise taxes on locally manufactured Virginia-type cigarettes.

By Leila B. Salaverria

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