THE government will release P15.81 billion collected from excise taxes on tobacco products using domestically-grown Virginia, Burley and native varieties to local government units (LGUs) to assist farmers in improving their productivity or shifting to other crops, the Department of Budget and Management (DBM) said in a memorandum order.

Of the P15.81 billion sourced from 2016 excise tax collections, P12.88 billion was generated by from cigarettes, and P2.93 billion by tobacco.

Ilocos Norte generated excise tax from cigarettes of P7.68 billion in 2016, followed by Abra with P1.92 billion; La Union P1.45 billion; and Misamis Oriental P775.4 million.

According to the DBM memorandum signed by officer-in-charge Janet B. Abuel on June 14, the funds will support the promotion of self-reliance by tobacco farmers through cooperative projects; livelihood projects focusing on developing alternative farming systems; post-harvest and secondary processing facilities; and infrastructure projects such as farm-to-market roads.

Under Republic Act 7171, LGUs producing Virginia-type cigarettes are entitled to 15% of the national tax collection.

For non-cigarette tobacco products, Isabela generated P1.426 billion in 2016 excise.

Other provinces generating excise tax in this segment were Abra, Kalinga, Ilocos Norte, Ilocos Sur, La Union, Pangasinan, Cagayan, Nueva Vizcaya, Tarlac, Occidental Mindoro, Misamis Oriental, Maguindanao and North Cotabato.

Under Republic Act 8240, LGUs producing burley and native tobacco are also entitled to a 15% share from the excise generated by these products, with 10% going to provinces and the 90% to cities and municipalities, depending on their share of tobacco production volume.

“The individual shares of the beneficiary LGUs were computed based on their respective volumes of production and trade acceptances, as reflected in the certifications issued by the National Tobacco Administration and endorsed by the Department of Agriculture,” the DBM said in its memorandum.

Finance Secretary Carlos G. Dominguez III has said that the Department of Finance (DoF) will work with the top tobacco producing regions to allot funds for crop diversification. The DoF and the Department of Health aim to reduce if not eliminate the use of cigarettes by increasing the excise tax per pack to P60 from P35.

“We will work with the four tobacco producing provincial local government units (LGUs) who collectively receive about P15 billion annually as their share of the tobacco tax, to allocate funds for crop diversification,” Mr. Dominguez said. — Reicelene Joy N. Ignacio