MANILA - President Arroyo has ordered the release of P6.37 billion to tobacco-producing provinces, representing their 15-percent share in excise-tax collections on tobacco products from 1997 to 2007.
The President, who expressed confidence that her order would have no bearing on the government’s fiscal targets, authorized the fund release through Executive Order (EO) 843 dated November 5, 2009.
EO 843 covers the beneficiary local government units (LGUs) consisting of provinces, cities and municipalities producing burley and native tobacco which may opt to obtain their shares over a seven-year installment period from 2010 to 2016, or through a monetization program.
She said Section 8 of Republic Act 8420, which took effect on January 1, 1997, mandates that 15 percent of the incremental revenue collected from the excise tax on tobacco products shall be allocated and divided among the concerned LGUs in accordance with the volume of tobacco-leaf production.
“Due to the absence of the implementing rules and regulations [IRRs], no funds had so far been released to the beneficiary LGUs ever since the law was enacted in 1997, leaving an accumulated allocable share of P6,370,708,183.73 as of CY 2007,” she said.
The amount represents 15 percent of the excess of the actual collection of excise taxes from tobacco products as computed according to the manner prescribed in Revenue Regulations 15-2008 issued and certified by the Department of Finance–Bureau of Internal Revenues (DOF-BIR).
“In accordance with the above statutory mandate, the accumulated 15 percent allocable share amounting to P6,370,708,183.73 from the incremental revenue on tobacco products can now be released to the beneficiary LGUs producing burley and native tobacco without disrupting the fiscal targets of the country to maintain macroeconomic stability,” the President said.
Under EO 843, the DOF, Department of Budget and Management (DBM), BIR and the National Tobacco Administration (NTA) were directed to take the necessary steps to ensure that the beneficiary LGUs get their respective shares either on a seven-year installment basis from fiscal years 2010 to 2016, or through a monetization program (MP).
The MP will provide beneficiary LGUs the option to collect their respective shares in advance from the trustee banks at a discounted value, net of interest and other charges.
The BIR will submit to the DBM a certification representing the 15 percent of the incremental revenue collected from the excise tax on tobacco products for the purpose of providing an appropriation cover.
The NTA will submit to the DBM a certification showing the list of burley and/or native tobacco-producing LGUs and the respective volume of acceptances (in kilograms) duly approved by the NTA administrator.
The DBM will determine the share of each beneficiary LGU on the basis of the BIR and NTA certifications, and will issue the corresponding notice of payment schedule to inform the beneficiary LGUs of their shares and the schedule of payment.
The DBM will also provide an annual appropriation cover for the purpose.
The DOF will provide the letter of confirmation of the national government that the P6,370,708,183.73 constitutes an obligation of the government.
The DOF will also “favorably endorse to the Bangko Sentral ng Pilpinas 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,” EO 843 stated.
At the option of the recipient LGU, the DOF may make arrangements with the trustee bank on requirements for opening the necessary special trust account, and make available the facilities of the Bureau of the Treasury for the auctioning process and the implementation of the MP.
This includes the Registry of Scripless Securities, the Automated Debt Auction Processing System and other facilities as may be required and necessary.
Government financial institutions designated by a recipient LGU for the undertaking shall serve as trustee bank/s for purposes of monetizing the shares of the latter.
All transactions related to the monetization program shall be undertaken in accordance with the existing accounting, auditing, and budgeting rules and regulations.
The COA shall provide guidelines in recording of the obligation in the books of account of the National Government.
A list of the beneficiary LGUs that availed of the MP shall be submitted to the DBM.
EO 843 also stated that “if any section or provisions of this Executive Order shall be declared unconstitutional or invalid, the other sections or provisions not affected thereby shall remain in full force and effect.”