Bill Seeking to Finance Farm-to-Market Roads With Tobacco Excise Taxes Gains Ground

Source from:  BusinessWorld Online 06/28/2012

A BILL SEEKING to finance infrastructure projects in tobacco-producing provinces with excise taxes collected from tobacco products was referred to the House Committee on Ways and Means earlier this month, a press release yesterday showed. House Bill (HB) 6317, filed on June 5 and forwarded to the committee a day after, aims to amend Republic Act (RA) 8240 or the National Internal Revenue Code. RA 8240 currently allots 15% of the revenues collected from excise tax on tobacco products for a fund to be used only for programs of farmers. The fund is shared among burley and native-tobacco producing provinces. The said fund shall only be used on cooperative projects improving the quality of agricultural products and raising the income of farmers as well as livelihood projects specifically the "development of alternative farming," the law states. It shall also be used on agro-industrial projects enabling farmers to own post-harvest projects and secondary processing projects such as cigarette manufacturing. If HB 6317 is passed in the last stretch of the 15th Congress, farmers will also benefit from infrastructure projects such as farm-to-market roads and bridges. The measure was authored by La Union Reps. Victor F. Ortega (1st district) and Eufranio C. Eriguel (2nd district), whose constituents are farmers of Virginia, burley and native types of tobacco, based on the data from the National Tobacco Administration's Web site. Other growers of burley tobacco are Pangasinan, Abra, Isabela, Cagayan, Tarlac, and Occidental Mindoro. Cagayan, Isabela, Nueva, Nueva Vizcaya, Quirino, Capiz, Iloilo, Cebu, Negros Oriental, Leyte, Zamboanga del Sur, Bukidnon, Misamis Oriental, North Cotabato, and Maguindanao are growers of native tobacco. In the bill's explanatory note, the lawmakers said that the Joint Circular 2009-1 implementing section 8 of RA 8240 impedes the development of infrastructure projects for farmers. The joint circular was penned by the Department of Budget and Management (DBM), the National Tobacco Administration, and the Bureau of Internal Revenue. "The DBM now is of opinion that the enumeration under section 8 of RA 8240 as implemented by [the joint circular] is exclusive, thereby disallowing projects now specifically mentioned such as infrastructure projects…" the solons stated. The legislators argued that the projects provided in RA 7171, "An Act to Promote the Development of the Farmers in the Virginia Tobacco, should be the same with RA 8240. "It is our view that section 8 of RA 8240 should have been interpreted relative to RA 7171 as intended by the lawmakers who crafted [it]. This is the reason why the objectives of RA 8240… are similar to those of RA 7171… which provides that 15% of tax proceeds from locally manufactured Virginia-type of cigarettes (sic) shall be used for four different types of projects including '[d] infrastructure projects such as farm-to-market roads.' Why should the proceeds from burley and native tobacco be any different?" Last month, HB 5727, the "sin" tax reform bill, was passed in the House of Representatives. The measure, certified as urgent by the President, will impose higher excise taxes and set two tiers for tobacco products, wines and fermented liquors and three tiers for distilled spirits, all pegged on these products' net retail prices. Revenues that will be generated from the change in excise taxes are earmarked for the administration's universal health care program and for the benefit of farmers. Meanwhile, the Senate has yet to pass their version of the sin tax reform bill. Three measures restructuring excise taxes of tobacco and alcohol products -- Senate Bills (SB) 2763 and 2764 by Sen. Panfilo M. Lacson and SB 2998 by Sen. Miriam Defensor-Santiago -- are still pending in the Senate Committee on Ways and Means chaired by Sen. Ralph G. Recto since last year. -- Monica Joy O. Cantilero Enditem