Release of P5.8-billion share of LGUs in Virginia tobacco excise tax
PRESIDENT Arroyo has ordered the release of the P5.8-billion share of concerned local government units (LGUs) from excise-tax collections on locally manufactured Virginia-type cigarettes from 2002 to 2009.
The President issued the directive through Executive Order (EO) 846, dated November 16, authorizing the monetization of the unappropriated and unreleased share of Virginia tobacco-producing LGUs from the 15- percent excise-tax collection on locally manufactured Virginia-type cigarettes for calendar years 2002 to 2009.
In issuing EO 846, the President noted that “there are unreleased appropriations for the calendar years 2002, 2005 to 2008, and an unappropriated share of LGUs for CYs 2002-2004, accumulating to P5,810,192,796.”
She ordered the Department of Finance (DOF), Department of Budget and Management (DBM) and the National Tobacco Administration (NTA) to take “all the necessary steps to ensure that the beneficiary-LGUs get their respective shares from the unreleased and unappropriated portion of the 15 percent of the excise-tax collection on Virginia-type cigarettes for CYs 2002 to 2009 amounting to P5,810,192,796 through a monetization program [MP].”
Should beneficiary LGUs avail themselves of the fund, the MP will give the latter the option to collect in advance from the trustee banks their respective shares at a discounted value, net of interests and other charges.
The President ordered the Bureau of Internal Revenue to submit to the DBM a certification representing 15 percent of the excise-tax collection on Virginia-type cigarettes, to provide an appropriation cover.
The NTA will submit to the DBM a certification, duly approved by the NTA administrator, of Virginia tobacco production and Virginia tobacco acceptances by province, including congressional districts, cities and municipalities of each beneficiary-province.
The DBM will determine the share of each beneficiary-LGU from the unreleased portion of 15-percent excise-tax collection of volume and production and trade acceptances; issue the corresponding notice of payment schedule to inform the beneficiary LGUs of their share; and provide an annual appropriation cover.
The President also ordered the DOF to provide the letter confirmation of “the national government that the P5,810,192,796 constitutes an obligation of the Republic of the Philippines.”
The DOF will “favorably endorse to the Bangko Sentral ng Pilipinas, or other regulatory agencies as the case may be, the application to secure the necessary financial features for the investment certificates that may be issued to improve the net proceeds to the beneficiaries.”
At the option of the recipient LGU, the DOF will make an arrangement with the trustee bank on the requirements for opening a special trust account.
The DOF will also arrange with the Bureau of Treasury to make available its facilities, including the Registry of Scripless Securities, the Automated Debt Action Processing System, and others as may be required and necessary for the auctioning process and the implementation of the MP.
The government financial institution or institutions designated by the recipient-LGU shall serve as trustee bank or banks to monetize the shares of beneficiary-LGUs.
All MP-related transactions shall be undertaken according to existing accounting, auditing and budgeting rules and regulations. A list of the beneficiary- LGUs that availed themselves of the MP shall be submitted to the DBM.
The Commission on Audit shall provide guidelines in recording the obligation in the books of account of the national government.
EO 846 also provides that if any section or provision is declared unconstitutional or invalid, unaffected sections of the EO shall remain in full force and effect.
Under Republic Act 7171 and Memorandum Circular 61-A, LGUs producing Virginia tobacco shall have a 15-percent share from excise tax collected on locally manufactured Virginia-type cigarettes, to be spent on projects to “advance the self-reliance of Virginia tobacco farmers,” EO 849 stated.
BIR Revenue Resolution 12-2008 provides that Virginia-type cigarettes shall refer to cigarettes containing Virginia-type leaf tobacco, whether imported or locally produced.
