LGUs’ share from tobacco tax can reach P21 billion

lgus share from tobacco tax can reach p21 billion - LGUs’ share from tobacco tax can reach P21 billion
cigarettes tobacco tax - LGUs’ share from tobacco tax can reach P21 billion
Excise taxes on tobacco products collected in 2018 and 2019 will be distributed to local government units in 2020 and 2021. — REUTERS

TOBACCO-PRODUCING provinces may receive up to P21 billion in 2022, as their share in collection of excise taxes on tobacco products this year, the Budget department said.

The Department of Budget and Management (DBM) and the Department of Agriculture (DA) issued on June 25 a Joint Memorandum Circular (JMC) No. 2020-1 that sets out guidelines on the allocation, release and use of local government units’ (LGU) share from 2020 excise tax collections on tobacco products.

The circular, which was published over the weekend, stated that LGUs will get five percent of the revenues collected from excise taxes on tobacco products but not exceeding P4 billion.

Fifteen percent of revenues generated from excise taxes on locally produced Virginia-type cigarettes but not exceeding P17 billion will go to the beneficiary LGUs.

Excise tax collections in 2020, the first year of the implementation of Republic Act. No. (RA) 11346, will be distributed to the LGUs in fiscal year 2022.

Meanwhile, excise taxes on these tobacco products collected in 2018 and 2019 will be distributed to LGUs in 2020 and 2021, respectively.

The circular stated the share of LGUs from tobacco excise taxes should be used exclusively to fund programs promoting “economically viable alternatives” for burley and native tobacco farmers as well as those that will “further advance self-reliance and expand” alternatives for Virginia-tobacco farmers.

Programs may be in the form of training and financial assistance, as well as through cooperative, livelihood, infrastructure and agri-industrial projects.

“Moreover, beneficiary LGUs are highly encouraged to allocate at least 25% of their total share for cooperative programs, livelihood projects and financial support for registered tobacco farmers,” the circular said.

Their share will be treated as a special account under the LGUs’ general funds.

LGUs will have to report on how the funds were used and the status of programs every quarter to DBM, DA and the Bureau of Local Government Finance.

RA 11346 was signed into law in July 2019, increasing the excise tax on tobacco products. — Beatrice M. Laforga

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