EIGHTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )

First Regular Session )
HOUSE OF REPRESENTATIVES
H.B.No,__4349

Introduced by Rep. Vilma Santos-Recto
6" District of Batangas

AN ACT
MODERNIZING AGRICULTURE, PROVIDING FUNDS FROM THE ANNUAL
VALUE-ADDED TAX COLLECTIONS, AMENDING FOR THE PURPOSE THE
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED

EXPLANATORY NOTE

Agriculture is the foundation of a rural economy, supplies food and raw materials for the
country’s people and industries. It provides employment and livelihood to about 23.1% of our
labor force'. Despite the onslaught of natural hazards and pestilence, as well as the ever-
increasing costs of production inputs, the agricultural sector still contributed 9.28% to the
Philippine gross domestic product (GDP) in 20187,

However, growth in this sector has not been enough to improve overall agricultural
productivity and achieve food security. Whereas the year-on-year Gross Domestic Product grew
by 10.24% in 2018, the agricultural, forestry and fisheries sector grew only by 5.91%’. While
the number of employed persons grew by 1.21% in July 2018 compared to July 2017, the
estimated number of persons employed in the sector decreased by 7.28%". Even the production
volume of crops like palay and com in 2018 also registered a decline of 1.09% and 1.81%,
respectively®. As a result, the comparative advantage of Philippine agriculture continues to be
eroded and our country increasingly becomes more dependent on agricultural imports.

‘These problems can be traced back to one of the major impediments to agricultural
productivity: public and private investments in agriculture fall below levels at which the sector

* Philippine Statistical Authority. (2018 October) Current Labor Statistics. Quezon City: Philippine Statistical Authority.

* Philippine Statistical Authority. (2019 Apri). Gross National income and Gross Domestic Product by industry. Quezon City: Philippine
Statistical Authority.

* Philippine Statistical Authority. (2019 Apri). Gross National Income and Gross Domestic Product by Industry. Quezon City: Philippine
Statistical Authority

‘Philippine Statistical Authority (2018 October). Current Labor Statistics. Quezon City: Philippine Statistical Authority.

* Philippine Statistical Authority. (2019 January). Countrystat Philipines. Quezon City: Philippine Statistical Authority.

1


‘can meet actual food requirements of our increasing population. Low investment contributes to
low productivity, higher inefficiency, higher postharvest losses, poor product handling,
inadequate skills, and deficient technical support, among others. As such, before agriculture can
take the role in poverty and hunger alleviation, adequate funding support must be promptly
identified and earmarked.

This bill seeks to address the agricultural investment problem by earmarking funds

specifically for farm inputs, post-harvest facilities, and infrastructure support. In order to
promote agribusiness as a tool for countryside development, this bill also provides funding
support to livelihood programs, training and capacity-building, and microfinance. At the end of
the day, this bill aims to help in providing decent livelihood and income for farmers, in
maintaining stable prices of commodities, and in ensuring the accessibility of food to all
Filipinos.

In view of the foregoing, immediate passage of this bit

VILMA SANTOS-RECTO



EIGHTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES )
First Regular Session )
HOUSE OF REPRESENTATIVES
H.B.No,_$349

Introduced by Rep. Vilma Santos-Recto
6" District of Batangas

AN ACT
MODERNIZING AGRICULTURE, PROVIDING FUNDS FROM THE ANNUAL
VALUE-ADDED TAX COLLECTIONS, AMENDING FOR THE PURPOSE THE
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

Section 1. A new section, to be numbered two hundred eighty-seven, shall be added to
Chapter I, Title XI of the National Internal Revenue Code, as amended to read as follows:

“SEC. 287. DISPOSITION OF PROCEEDS OF VALUE-ADDED TAX. —
FIVE PERCENT (5%) OF THE VALUE-ADDED TAX COLLECTED UNDER
TITLE IV OF THIS ACT, AS AMENDED, SHALL BE ALLOCATED TO THE
FOLLOWING AGRICULTURE EXPENDITURES:

1.) TWENTY PERCENT (20%) = FOR ~~ CONSTRUCTION,
REHABILITATION AND RESTORATION OF COMMUNAL IRRIGATION
SYSTEMS;

2.) TEN PERCENT (10%) FOR POST-HARVEST FACILITIES
INCLUDING MECHANICAL AND SOLAR DRYERS AND WAREHOUSES;

3.) TEN PERCENT (10%) FOR SEED AND ORGANIC FERTILIZER
SUBSIDIES;

4.) TWENTY PERCENT (20%) FOR FARM-TO-MARKET ROADS IN
MUNICIPALITIES WITH SIGNIFICANT AGRICULTURAL ACTIVITIES;

5.) TEN PERCENT (10%) FOR LIVESTOCK DISPERSAL PROGRAM;

6.) TEN PERCENT (10%) FOR TRAINING AND CAPABILITY
BUILDING PROGRAMS FOR AGRICULTURAL EXTENSION WORKERS AND
THEIR CLIENTELE;


we arvraneune

7.) TEN PERCENT (10%) FOR MICROFINANCE LENDING

PROGRAMS TO FINANCE SMALLHOLDER AGRICULTURE; AND

8.) TEN PERCENT (10%) FOR THE ESTABLISHMENT AND

MAINTENANCE OF MARICULTURE AND AQUACULTURE PARKS,

THE FUND SHALL BE ADMINISTERED BY THE DEPARTMENT OF
AGRICULTURE IN CONSULTATION WITH THE LOCAL GOVERNMENT UNITS
CONCERNED.”

Sec. 2. The succeeding sections of the National Internal Revenue Code are hereby
renumbered accordingly.

Sec. 3. Implementing Rules and Regulations. — The Department of Budget and
Management, the Department of Finance, the Department of Agriculture, and the Bureau of
Internal Revenue shall, within thirty (30) days from the effectivity of this Act, issue the
necessary rules and regulations for its effective implementation.

Sec. 4. Repealing Clause. ~ All laws, decrees, executive orders, rules and regulations, or
parts thereof which are inconsistent with this Act are hereby repealed, amended or modified
accordingly.

Sec. 5. Effectivity. ~ This Act shall take effect fifteen (15) days after its publication either
in the Official Gazette or it

at least two (2) newspapers of general circulation.

Approved,