Tobacco farmers consulted on revision of regulations on use of sin tax proceeds

SAN FERNANDO CITY, Philippines —The National Tobacco Administration (NTA) has begun consulting tobacco farmers’ groups in northern Luzon to gather input for the revision of the implementing rules and regulations (IRR) on the use of the increased excise taxes imposed on cigarettes.

Edgardo Zaragoza, NTA chief, said that together with the Department of Finance and the Department of Budget and Management, his office was working on a revised IRR to ensure that excise taxes from cigarettes will directly benefit tobacco farmers.

“In 2013, excise tax collection from tobacco increased by almost P35 billion. From P32 billion in 2012, it became P67 billion in 2013,” said Zaragoza, who met here on Saturday with officials and members of the National Federation of Tobacco Farmers’ Associations and Cooperatives.

“They were telling us many things about what should be done. And we are compiling all these,” Zaragoza said after the dialogue.

The increase in excise taxes was triggered by the enactment in December 2011 of Republic Act No. 10351, or the sin tax law, which levies higher taxes on cigarettes and liquor. The law took effect in January 2012.

Under the law, a portion of revenue collected will be allocated to projects that will benefit tobacco farmers and workers nationwide in addition to the tobacco farmers’ livelihood support under RA 7171 and RA 8240.

RA 8240 provides the excise tax structure for cigarettes and liquor, while RA 7171 states that 15 percent of all excise tax on cigarettes is automatically set aside for the Virginia tobacco-producing provinces.

Zaragoza said the benefits of higher sin tax collection in 2013 would be felt in 2015 because in a given year, the amount of excise tax collections that has to be divided among beneficiaries is based on the collections from the past two years.

“So the collection in 2013 will only benefit us in 2015,” Zaragoza said.

He said that under the law, a province and a congressional district each get a 30-percent share, while a town gets 40 percent.

“But of course, we are now having a little problem with the district share. But we are doing something about it,” Zaragoza said.

He said he would consult on Tuesday the private sector, which consists of cigarette makers and all those who are buying tobacco. Then on Feb. 20 to 21, he will meet with local government officials in tobacco-producing areas.

Zaragoza said that after the consultations, he hoped to come up with a range of projects from which local government officials can choose.

“But foremost, not only will they have choices but it’s also important to emphasize to them that these are projects that will go directly to the farmers. We are assured that these funds will be used for the development or progress of a community,” he said.  Gabriel Cardinoza, Inquirer Northern Luzon