Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

House pitt No. 3489

Introduced by HON. NIEL “JUNJUN"C. TUPAS, JR.
_ ___5" District of Hoilo

EXPLANATORY NOTE

This bill secks to achieve the twin objectives Of promoting the health of the”

people by discouraging tobacco use and of addressing our country’s fiscal concerns by
generating higher tax revenues from tobacco products. An increased and unitary tax rate,
which will be adjusted annually to present values using the consumer price index, for
tobacco products is proposed.

The harmful effects of tobacco consumption and of second-hand smoke are
already established medical facts. Despite textual warnings to this effect, cigarette
smoking continues to be widespread. The 2009 Philippines’ Global Adult Tobacco
Survey (“GATS”) on tobacco use in the Philippines shows that among adults 15 years or
older, 28.3% representing 17.3 million Filipinos are current tobacco smokers, and 22.5%
or approximately 13.8 million Filipinos smoke everyday consuming an average of 10.6
cigarettes a day. The same survey shows that more people are exposed to second-hand
smoke in their homes, workplaces and public places. According to the Philippine
Department of Health (DOH), there are about 5,000,000 deaths a year worldwide directly
related to tobacco. ‘The World Health Organization (WHO) estimates this to double by
2020 if present trends continue unchecked, with 70% of mortality taking place in
developing countries. In the Philippines, 240 Filipinos die everyday or over 87,000 a
year from diseases caused by tobacco.’ Such figures are alarming and make the need to
curb tobacco use extremely urgent

‘Among the various means of curbing cigarette usage, raising taxes on tobacco
products have been proven to be the most effective Higher tobacco taxes that lead to
higher cigarette prices encourage smokers to quit, reduce the number of cigarettes
smoked, and prevent initiation among potential new users.* Indeed, consumer behavior is
largely influenced by the cost of a product which is affected by the taxes imposed on the
said product. To achieve this, an effective tax structure for tobacco products must be put
in place. Despite the Philippines’ excise tax law on cigarettes having been amended
seventeen (17) times, the tax increases have not been able to push the retail prices of
tobacco products in the Philippine high enough to discourage people from smoking
Smokers, especially those who belong to the low-income groups and the youth, simply
shift to cheaper brands to sustain the habit. Based on the study of Blecher and Walbeek,

" Administrative Order No, 2010-0013 dated 12 May 2010 issued by the Office of the Secretary, Philippine
Department of Health.

* Rimando, Lala, “Affordable Sin”, Newsbreak, (March/April 2010), p. 22

Article 6 of the Framework Convention on Tobacco Control also provides that “(Ithe parties recognize
that price and tax measures are an effective and important means of reducing tobacco consumption by
various segments of the population.” -

> Shafey, Dr. Omar; Eriksen, Dr. Michael; Ross, Dr. Hana; Mackay, Dr. Judith, “The Tobacco Atlas Third
Edition (2009), p. 82.



the dollar cost of cigarettes in the Philippines is one of the lowest among middle-income
countries. In Asia, cigarette costs are lowest in the Philippines as compared to Malaysia,
Thailand, Indonesia, and even against low-income neighbors Vietnam and Bangladesh.’
The availability of cheap cigarettes could increase smoking among the poor and the
youth. Money for cigarettes in the poorest households is sixteen times more than
spending on health, eleven times more than outlays for education, and twice as much for
housing, according to the Tobacco and Poverty Study in the Philippines conducted by the
WHO, the DOH and the University of the Philippines-Manila $

The behavior of smokers in response to the previous tax ificreases on cigarettes
proves that such increases have failed to meet the health objective. Observers attribute
this failure to weaknesses in the tobacco tax system in the Philippines, namely: 1)
specific taxes on cigarettes have not kept up with the rising tobacco prices; and 2) many
low-priced cigarette brands are subject to lower taxes than others, allowing their
‘manufacturers to sell or retail them at prices that even poor smokers and the youth can
afford. Therefore, there is an urgent need to reform our current tax laws on cigarettes.

This bill proposes to increase tax rates to bring it to current market prices of
tobacco products. After a transition period, a uniform tax rate for all types of cigarettes is
also envisioned thereby removing the four-tiered tax structure. These changes are seen to
lessen and discourage the consumption of tobacco products which lead to a reduction in
the impact of the same on the health of the people. ‘These will also reduce the economic
costs of tobacco-related diseases, which the DOH estimates to be between Php100 Billion
to Php300 Billion. Further, a unitary tax system for tobacco will make the administration
of excise taxes on tobacco products simpler, correct distortions that give advantage to
some brands, and level the playing field for manufacturers, In addition, the WHO's
Framework Convention on Tobacco Control, to which the Philippines is a party, compels
signatories to adopt tax and price policies that reduce and discourage tobacco
consumption,

In view of the foregoing considerations, approval of this bill is earnestly sought

Sa
wr )v x Py $$
‘ SHONJUN” C. TUPAS, JRE

*Rimando, p. 23,

$ Landingin, Roel, “Not Enough Taxed”, Newsbreak (March/April 2010), p..19._ _
Ibid, pp. 19-20.


Republic of the Philippines~_ ~~
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE. BILL NO. 3489

Introduced by HON. NIEL “JUNJUN” C. TUPAS, JR.
5" District of Hloilo

AN ACT RESTRUCTURING THE EXCISE TAX ON TOBACCO PRODUCTS AND
AMENDING FOR THE PURPOSE PERTINENT SECTIONS OF THE NATIONAL,
INTERNAL REVENUE CODE, AS AMENDED.

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

SECTION 1. Section 144 of the National Intemal Revenue Code of 1997, as amended by

Republic Act. No. 9334, is hereby further amended to read as follows:

“See. 144. Tobaceo Products. — There shall be collected.a tax of [One peso-(P1.00)]-TWO.- _
PESOS AND FIFTY CENTAVOS (P2.50) on each kilogram of the following products of
tobacco:

(a) Tobacco twisted by hand or reduced into a condition to be consumed in any manner

other than the ordinary mode of drying and curing;

(b) Tobacco prepared or partially prepared with or without the use of any machine or

instruments or without being pressed or sweetened except as otherwise provided

hereunder; and.

(© Fine-Cut shorts and refuse, scraps, clippings, cuttings, stems and sweepings of

tobacco except as otherwise provided hereunder.


Stemmed leaf tobacco, tobacco prepared or partially prepared with or without the use of
any machine or instrument or without being pressed or sweetened, fine-cut shorts and
refuse, scraps, clippings, cuttings, stems, midribs, and sweepings of tobacco resulting
from the handling or stripping of whole leaf tobacco shall be transferred, disposed of, or
otherwise sold, without any prepayment of the excise tax herein provided for, if the same
are to be exported or be used in the manufacture of cigars, cigarettes, or other tobacco
products on which the excise tax will eventually be paid on the finished product, under
such conditions as may be prescribed in the rules and regulations promulgated by the

Secretary of Finance, upon the recommendation of the Commissioner.

‘On tobacco specially prepared for chewing so as to be unsuitable for use in any other

manner, on each kilogram, [Seventy-nine centavos (P0.79)] ONE PESO AND
EIGHTY-SEVEN CENTAVOS (P 1.87).

[The rates of tax imposed under this Section shall be increased by six percent (6%)

every two years starting on January 1, 2007 until January 1, 2011.”]

PROVIDED, THAT ON JANUARY 1, 2013 AND EVERY YEAR THEREAFTER,
THE EXCISE TAX RATES PRESCRIBED HEREIN SHALL BE ADJUSTED
ANNUALLY TO THEIR PRESENT VALUE USING THE CONSUMER PRICE

INDEX, AS PUBLISHED BY THE NATIONAL STATISTICS OFFICE.

Manufacturers and importers of tobacco products shall within thirty (30) days from the
effectivity of this Act, and within the first five (5) days of every month thereafter, submit
to the Commissioner a sworn statement of the volume of sales for each particular brand
of tobacco products sold fat their establishment] for the three-month period immediately

preceding.

Any manufacturer or importer who, in violation of this Section, knowingly misdeclares
and misrepresents in his or its swom statement herein required any pertinent data or

information shall, upon discovery, be penalized by a summary cancellation or withdrawal


of his or its permit to engage in business as manufacturer or importer of cigar and

cigarettes

Any corporation, association or partnership liable for any of the acts or omissions in
violation of this Section shall be fined treble the amount of deficiency taxes, surcharges

and interest which may be assessed pursuant to this Section

Any person liable for any of the acts and omissions prohibited under this Section shall be
criminally liable and penalized under Section 254 of this Code. Any person who willfully
aids or abets in the commission of any such act or omission shall be criminally liable in

the same manner as the principal.

If the offender is not a citizen of the Philippines, he shall be deported immediately after

serving the sentence, without further proceedings for deportation.

SECTION 2. Section 145 of the National Intemal Revenue Code of 1997, as amended by

Republic Act. No. 9334, is hereby further amended to read as follows.
“Sec. 145. Cigars and Cigarettes.

(A) Cigars. ~ ‘There shall be levied, assessed and collected on cigars fan ad valorem tax
based on the net retail price] A TAX OF TWO HUNDRED PESOS (P200.00) per
cigar. [(excluding the excise tax and the value- added tax) in accordance with the

following schedule:]

[*(1) If the net retail price per cigar is Five hundred pesos (P500.00) or less, ten percent
(10%); and}

[*@) If the net retail price per cigar is (excluding the excise tax and the value-added tax)
is more than Five hundred pesos (P500.00), Fifty pesos (P50.00) plus fifteen percent

(15%) of the net retail price in excess of Five hundred pesos (P500.00).”]



PROVIDED, THAT ON JANUARY 1, 2013 AND EVERY YEAR THEREAFTER,
THE EXCISE TAX RATE PRESCRIBED HEREIN SHALL BE ADJUSTED
ANNUALLY TO ITS PRESENT VALUE USING THE CONSUMER PRICE

INDEX, AS PUBLISHED BY THE NATIONAL STATISTICS OFFICE.

(B) Cigarettes Packed by Hand. — There shall be levied, assessed and collected on
cigarettes packed by hand a tax at the [rates prescribed below] RATE OF FOURTEEN
PESOS (P14.00) PER PACK.

[“Effective on January 1, 2005, Two pesos (P2.00) per pack;]
[“Effective on January 1, 2007, Two pesos and twenty-three centavos (P2.23) per pack;]

[Effective on January 1, 2009, Two pesos-and forty-sevelt Gentavos (P2.47) per pack;
and]

[Effective on January 1, 2011, Two pesos and seventy-two centavos (P2.72) per pack.)

PROVIDED, THAT ON JANUARY 1, 2013 AND EVERY YEAR THEREAFTER,
‘THE EXCISE TAX RATE PRESCRIBED HEREIN SHALL BE ADJUSTED
ANNUALLY TO ITS PRESENT VALUE USING THE CONSUMER PRICE

INDEX, AS PUBLISHED BY THE NATIONAL STATISTICS OFFICE.

Duly registered or existing brands of cigarettes or new brands thereof packed by hand
shall only be packed in thirties. ANY BRAND NOT PACKED IN THIRTIES SHALL
BE PROHIBITED AND SUBJECTED TO PENALTIES PROVIDED UNDER
THIS ACT, WITHOUT PREJUDICE TO OTHER ADMINISTRATIVE OR
CRIMINAL PENALTIES THAT MAY BE IMPOSED ON THE

MANUFACTURER, IMPORTER AND DISTRIBUTOR OF THE SAID BRAND.

(© Cigarettes Packed by Machine. — There shall be levied, assessed and collected on.

cigarettes packed by machine a tax at the rates prescribed below:



EFFECTIVE ON JANUARY 1, 2012 ~

(1) IF THE NET RETAIL PRICE (EXCLUDING THE EXCISE TAX AND THE
VALUE-ADDED TAX) IS TEN PESOS (P10.00) AND BELOW PER PACK, THE
‘TAX SHALL BE FOURTEEN PESOS (P 14.00) PER PACK;

(2) IF THE NET RETAIL PRICE (EXCLUDING THE EXCISE TAX AND THE
VALUE-ADDED TAX) IS MORE THAN TEN PESOS (P10.00) PER PACK, THE
TAX SHALL BE TWENTY-EIGHT PESOS AND THIRTY CENTAVOS (P28.30)

PER PACK;
EFFECTIVE ON JANUARY 1, 2013 -

(1) IF THE N

( RETAIL PRICE (EXCLUDING THE EXCISE TAX AND THE
VALUE-ADDED TAX) IS TEN PESOS (P10.00) AND BELOW PER PACK, THE
‘TAX SHALL BE TWENTY-TWO PESOS (P22.00) PER PACK;

(2) IF THE NET RETAIL PRICE (EXCLUDING THE EXCISE TAX AND THE
VALUE-ADDED TAX) IS MORE THAN TEN PESOS (P10.00) PER PACK, THE

‘TAX SHALL BE THIRTY PESOS (P30.00) PER PACK;

EFFECTIVE ON JANUARY 1, 2014, THE TAX SHALL BE THIRTY PESOS

(P30.00) PER PACK, REGARDLESS OF THEIR RETAIL PRICE.

PROVIDED, THAT ON JANUARY 1, 2015 AND EVERY YEAR THEREAFTER,
THE EXCISE TAX RATE PRESCRIBED HEREIN SHALL BE ADJUSTED
ANNUALLY TO ITS PRESENT VALUE USING THE CONSUMER PRICE

INDEX, AS PUBLISHED BY THE NATIONAL STATISTICS OFFICE. ~~

ALL BRANDS OF CIGARETTES EXISTING IN THE MARKET AT THE TIME
OF THE EFFECTIVITY OF THIS ACT SHALL BE CLASSIFIED
ACCORDINGLY FOR THE PROPER DETERMINATION OF THE TAX
LIABILITY IN ACCORDANCE WITH ‘THE SCHEDULE PROVIDED ABOVE.

5


[* (1) If the net retail price (excluding the excise tax and the value added tax is below

Five pesos (P5.00) per pack, the tax shall be:]

[Effective on January 1, 2005, Two pesos (P2.00) per pack;
(“Effective on January 1, 2007,Two pesos and twenty-three centavos (P2.23) per pack;]

["Effective on January 1, 2009,Two pesos’ and forty-seven Centavos (P2.47) per pack;

and]
[‘Effective on January 1, 2011,Two pesos and seventy-two centavos (P2.72) per pack.]

[*@) If the net retail price (excluding the excise tax-and the value added tax) is Five

pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per pack, the tax
shall be:}

("Effective on January 1, 2005, Six pesos and thirty-five centavos (P6.35) per pack;]
{“Effective on January 1, 2007, Six pesos and seventy-four centavos (P6.74) per pack;)

[“Effective on January 1, 2009, Seven pesos and fourteen centavos (P7.14) per pack; and]

[Effective on January 1, 2011, Seven pesos and fifty-six centavos (P7.56) per pack.]

[“) If the net retail price (excluding the excise tax and the value added tax) exceeds Six

pesos and fifty centavos (P6.50) but does not exceed Ten pesos (P10.00) per pack, the tax

shall be:] 7 >

[Effective on January 1, 2005, Ten pesos and thirty-five centavos (P10.35) per pack;]

["Effective on January 1, 2007, Ten pesos and eighty-eight centavos (P10.88) per pack;]

ffective on January 1, 2009, Eleven pesos and forty-three centavos (P11.43) per pack;

and]

[Effective on January 1, 2011, Twelve pesos (P12.00) per pack.]
6


[*@) If the net retail price (excluding the excise tax and the value added tax) is above Ten

pesos (P10.00) per pack, the tax shall be:]
("Effective on January 1, 2005, Twenty-five pesos (P25.00)-per pack:] -
["Effective on January 1, 2007, Twenty-six pesos and six centavos (P26.06) per pack;]

(‘Effective on January 1, 2009, Twenty-seven pesos and sixteen centavos (P27.16) per

pack; and]

("Effective on January 1, 2011, Twenty-eight pesos and thirty centavos (P28.30) per
pack}

Variants of existing brands and variants of new brands of cigarettes which are introduced
in the domestic market after the effectivity of this Act shall be taxed under the proper
classification thereof based on their suggested net retail price: Provided, however, That
such classification shall not, in any case, be lower than the highest classification of any

variant of that brand.

A ‘variant of a brand” shall refer to a brand on which a modifier is prefixed and/or

suffixed to the root name of the brand.

shall only be packed in twenties. ANY BRAND NOT PACKED IN TWENTIES

SHALL BE PROHIBITED AND SUBJECTED TO PENALTIES PROVIDED
UNDER THIS ACT, WITHOUT PREJUDICE TO OTHER ADMINISTRATIVE
OR CRIMINAL PENALTIES THAT MAY BE IMPOSED ON THE

MANUFACTURER, IMPORTER AND DISTRIBUTOR OF THE SAID BRAND.

Any downward reclassification of present categories, for tax purposes, of existing brands
of cigars and cigarettes duly registered at the time of the effectivity of this Act which will

reduce the tax imposed herein, or the payment thereof, shall be prohibited.



“New brands as defined in the immediately following paragraph, shall initially be

classified according to their suggested net retail price.

““New brand’ shall mean a brand registered after the date of the effectivity of [R.A. No.
8240] THIS ACT.

“ ‘Suggested net retail price’ shall mean the net retail price by which new brands, as
defined above, of locally manufactured or imported cigarettes are intended by the
‘manufacturer or importer to be sold on retail in major supermarkets or retail outlets in
Metro Manila for those marketed nationwide, and in other regions, for those with
regional markets, At the end of three (3) months from the product launch, the Bureau of
Internal Revenue shall validate the suggested net retail price of the new brand against the
net retail price as defined herein and determine the correct tax bracket to which @
particular new brand of cigarette, as defined above, shall be classified. After the end of
cighteen (18) months from such validation, the Bureau of Internal Revenue shall
revalidate the initially validated net retail price against the net retail price as of the time
of revalidation in order to finally determine the correct, tax bracket-under- which a—
particular new brand of cigarettes shall be classified. [: Provided, however, That brands
of cigarettes introduced in the domestic market between January 1, 1997 and December
31, 2003 shall remain in the classification under which the Bureau of Internal Revenue
has determined them to belong as of December-31,.2003,-Such classification of new
brands and brands introduced between January 1, 1997 and December 31, 2003 shall not

be revised except by an act of Congress.

“ ‘Net retail price,’ as determined by the Bureau of Internal Revenue through a price
survey to be conducted by the Bureau of Internal Revenue itself, or by the National
Statistics Office when deputized for [the] this purpose by the Bureau of Internal Revenue,
shall mean the price at which the cigarette is sold on retail in at least twenty (20) major
supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding

the amount intended to cover the applicable excise tax and the value added tax. For


brands which are marketed only outside Metro Manila, the ‘nef retail price’, shall mean
the price at which the cigarette is sold in at least five (5) major supermarkets in the region
excluding the amount intended to cover the applicable excise tax and the value-added tax.
THE MAJOR SUPERMARKETS SHALL BE THOSE WITH THE HIGHEST
TOTAL GROSS SALES IN METRO MANILA OR THE REGION, AS THE CASE

MAY BE, AS DETERMINED BY THE NATIONAL STATISTICS OFFICE.

[The classification ofeach brand of cigarettes based on the average net retail price as of
October 1, 1996, as set forth in Annex ‘D’, including the classification of brands for the
same products which, although not set forth in said Annex 'D', were registered and were
being commercially produced and marketed on or after October 1,196, and which
continue to be commercially produced and marketed after the effectivity of this Act, shall

remain in force until revised by Congress.

Manufacturers and importers of cigars and cigarettes shall, within thirty (30) days from
the effectivity of this Act, and within the first five (5) days of every month thereafter,
‘submit to the Commissioner a sworn statement of the volume of sales for each particular

brand of cigars and/or cigarettes sold [at his estab

ishment

1 the three-month period

immediately preceding.

Any manufacturer or importer who, in violation of this Section, knowingly misdeclares or
misrepresents in his or its swom statement herein required any pertinent data or
information shall, upon discovery, be penalized by a summary cancellation or withdrawal
of his or its permit to engage in business as manufacturer or importer of cigars or

cigarettes.

Any corporation, association or partnership liable for any of the acts or omissions in
violation of this Section shall be fined treble the aggregate amount of deficiency taxes,

surcharges and interest which may be assessed pursuant to this Section,


Any person liable for any of the acts or omissions prohibited under this Section shall be
criminally liable and penalized under Section 254 of this Code. Any person who willfully
aids or abets in the commission of any such act or omission shall be criminally liable in

the same manner as the principal

If the offender is not a citizen of the Philippines, he shall be deported immediately after

serving the sentence, without further proceedings for deportation."

Section 3. Section 131, Subsection A of the National Internal Revenue Code of 1997, as

amended by Republic Act. No. 9334, is hereby further amended to read as follows’

"SEC. 131. Payment of Excise Taxes on Imported Articles. ~ -*

(A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or
importer to the Customs Officers, conformably with the regulations of the Department of
Finance and before the release of such articles from the customs house, or by the person

who is found in possession of articles which are exempt from excise taxes other than

those legally entitled to exemption

In the case of tax-free articles brought or imported into the Philippines by persons,
entities, or agencies exempt from tax which are subsequently sold, transferred or
exchanged in the Philippines to non-exempt persons or entities, the purchasers or
recipients shall be considered the importers thereof, and shall be liable for the duty and

internal revenue tax due on such importation.

The provision of any special or general law to the contrary notwithstanding, the
importation of cigars and cigarettes, distilled spirits, fermented liquors and wines into the
Philippines, even if destined for tax and duty-free shops, shall be subject to all applicable
taxes, duties, charges, including excise taxes due thereon. This shall apply to cigars and
cigarettes, distilled spirits, fermented liquors and wines brought directly into the duly
chartered or legislated freeports of the Subic Special Economic and Freeport Zone,

created under Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport,



created under Republic Act No. 7922; and the Zamboanga City Special Economic Zone,
created under Republic Act No. 7903, and such other freeports as may hereafter be
established or created by law; Provided, that NOTWITHSTANDING THE
PROVISIONS OF REPUBLIC ACT 9593, importation of cigars and cigarettes,
[distilled spirits, fermented liquors and wines] made directly by a government-owned-
and-operated duty-free shop, like the Duty-Free Philippines [(DFP)] CORPORATION,
shall NOT be exempted from EXCISE TAXES [all applicable duties only}; Provided,

further, that such articles directly imported by a government-owned-aiid-operated duty:

free shop, like the Duty-Free Philippines CORPORATION, shall be labeled ‘duty-free!
and ‘not for resale’; Provided, finally, ‘That the removal and transfer of tax- and duty-free
goods, products, machinery, equipment and other similar articles other than cigars and
cigarettes, distilled spirits, fermented liquors and wines, from one freeport to another

freeport, shall not be deemed an introduction into the Philippine customs territory.

Cigars and cigarettes, distilled spirits and wines within the premises of all duty-free shops
which are not labeled as hereinabove required, as well as tax- and duty-free articles
obtained from a duty-free shop and subsequently found in a non-duty-free shop to be
offered for resale shall be confiscated, and {the perpetrator of] such non-labeling, or re-

selling shall be punishable under the applicable provisions of this ACT [Code].

Articles confiscated shall be DESTROYED USING THE MOST
ENVIRONMENTALLY FRIENDLY METHOD AVAILABLE. [disposed of in
accordance with the rules and regulations to be promulgated by the Secretary of Finance,
upon recommendation of the Commissioners of Customs and Internal Revenue, upon
consultation with the Secretary of Tourism and the General Manager of the Philippine

Tourism Authority.]

(B) Rate and Basis of the Excise Tax on Imported Articles: - Unless otherwise specified

imported articles shall be subject to the same rates and basis of excise taxes applicable to

locally manufactured articles.”

1



Section 4. Section 288, subsections B and C of the National Internal Revenue Code of

1997, as amended by Republic Act. No. 9334, is hereby further amended to read as

follows:

"(B) Incremental Revenues from Republic Act No. 8240. - Fifteen percent (15%) of the

incremental revenue collected fiom the excise tax on tobacco products under R.A. No.
8240 shall be allocated and divided among the provinces producing burley and native
tobacco in accordance with the volume of tobacco leaf production. The fund shall be
exclusively utilized for programs [in pursuit of the following objectives} TO
PROMOTE ECONOMICALLY VIABLE ALTERNATIVES FOR TOBACCO
FARMERS AND WORKERS SUCH AS

(1) PROGRAMS THAT WILL PROVIDE INPUTS, TRAINING, AND OTHER
SUPPORT FOR TOBACCO FARMERS WHO SHIFT TO PRODUCTION OF
AGRICULTURAL PRODUCTS OTHER THAN TOBACCO.

(2) PROGRAMS THAT WILL PROVIDE FINANCIAL SUPPORT FOR
TOBACCO FARMERS WHO ARE DISPLACED OR WHO CEASE TO
PRODUCE TOBACCO VOLUNTARILY.

(3) COOPERATIVE PROGRAMS TO ASSIST TOBACCO FARMERS IN
PLANTING ALTERNATIVE CROPS OR IMPLEMENTING OTHER
LIVELIHOOD PROJECTS.

["(1) Cooperative projects that will enhance better quality of agricultural products and

increase income and productivity of farmers

[*@2) Livelihood projects, particularly the development of alternative farming system to

enhance farmer's income; and]

2


["G) Agro-industrial projects that will enable tobacco farmers to be involved in the
management and subsequent ownership of projects, such’as post-harvest.and secondary _

processing like cigarette manufacturing and by-product utilization ]

"The Department of Budget and Management, in consultation with the DEPARTMENT
OF AGRICULTURE [Oversight Committee created under said R.A. No. 8240], shall
issue [the corresponding] rules and regulations governing the allocation and disbursement
of this fund, NOT LATER THAN ONE HUNDRED EIGHTY (180) DAYS FROM
‘THE EFFECTIVITY OF THIS ACT.

(C) Incremental Revenues from the Excise Tax on Alcohol and Tobacco Products. ~

(1) Two and a half percent (2.5%) of the TOTAL [incremental] revenue from the excise
tax on alcohol and tobacco products starting [January 2005] JANUARY 1, 2012 shall be
remitted directly to the Philippine Health Insurance Corporation (PHC) for the purpose

‘of meeting and sustaining the goal of universal coverage of the National Health Insurance

Program; and

(2) Two and a half percent (2.5%) of the TOTAL [incremental] revenue from the excise
tax on alcohol and tobacco products starting [January 2005] JANUARY 1, 2012 shall be
ALLOCATED AND RELEASED [credited] AUTOMATICALLY to the account of
the Department of Health and constituted as a trust fund [for its disease prevention

program] TO BE MANAGED AND SET UP BY THE DEPARTMENT NO

LATER THAN SIXTY (60) DAYS AFTER THE EFFECTIVITY OF THE
IMPLEMENTING RULES AND REGULATIONS. THE FUND SHALL BE
EXCLUSIVELY UTILIZED FOR PROGRAMS ON THE PREVENTION OF

ALCOHOL-RELATED AND TOBACCO-RELATED DISEASES.

‘THE DEPARTMENT OF BUDGET AND MANAGEMENT, IN CONSULTATION
WITH THE PHILIPPINE HEALTH INSURANCE CORPORATION AND THE

DEPARTMENT OF HEALTH, SHALL ISSUE RULES AND REGULATIONS

B


GOVERNING THE ALLOCATION AND DISBURSEMENT OF THESE FUNDS,
NOT LATER THAN ONE HUNDRED EIGHTY (180) DAYS FROM THE

EFFECTIVITY OF THIS ACT.

['The earmarking provided under this provision shall be observed for five (5) years

starting from January 2005."]

THE EARMARKS PROVIDED IN SUBSECTION C SHALL BE OVER AND
ABOVE THE ALLOCATIONS PROVIDED IN THE GENERAL.
APPROPRIATIONS ACT. EARMARKS NOT APPROPRIATED OR USED IN A

FISCAL YEAR SHALL BE CARRIED OVER TO THE SUCCEEDING FISCAL
YEAR.

SECTION 5. ANNUAL REPORT - THE DEPARTMENT OF BUDGET AND

MANAGEMENT, THE DEPARTMENT OF AGRICULTURE,

(HE PHILIPPINE
HEALTH INSURANCE CORPORATION, AND THE DEPARTMENT OF HEALTH
SHALL EACH SUBMIT TO THE OVERSIGHT COMMITTEE CREATED UNDER R.A.
8240 A DETAILED REPORT ON THE EXPENDITURE OF THE AMOUNTS
EARMARKED UNDER SUBSECTIONS B AND C, ON THE FIRST WEEK OF

AUGUST OF EVERY YEAR. THE REPORTS SHALL BE SIMULTANEOUSLY _

PUBLISHED IN THE OFFICIAL GAZETTE AND THE AGENCIES’ WEBSITES.

SECTION 6. OVERSIGHT COMMITTEE - THE COMPOSITION OF THE
OVERSIGHT COMMITTEE CREATED UNDER R.A. 8240 SHALL INCLUDE THE
AGRICULTURE AND HEALTH COMMITTEE CHAIRPERSONS OF THE SENATE.
AND THE HOUSE OF REPRESENTATIVES, AS PART OF THE FOUR (4) MEMBERS
TO BE APPO!

ED FROM EACH HOUSE.

UPON RECEIPT OF THE AGENCIES’ ANNUAL REPORTS, THE COMMITTEE
SHALL REVIEW THEM AND ENSURE THE PROPER IMPLEMENTATION OF THIS

ACT AS REGARDS THE EXPENDITURES OF THE EARMARKED FUNDS.

14



¢ Secretary of Finance shall, upon the

SECTION 7. Implementing Rules and Regulations -
recommendation of the Commissioner of Internal Revenue, [and in consultation with the
Department of Health,] promulgate the necessary rules and regulations for the effective
implementation of this Act, NOT LATER THAN ONE HUNDRED EIGHTY (180) DAYS
UPON THE EFFECTIVITY OF THIS ACT. THE RULES AND REGULATIONS TO BE
PROMULGATED UNDER SECTION 4 HEREOF SHALL FORM AN INTEGRAL PART
OF THE IMPLEMENTING RULES AND REGULATIONS.

SECTION 8, Separability Clause. - If any of the provisions of this Act is declared invalid by a
competent court, the remainder of this Act or any provision not affected by such declaration of

invalidity shall remain in force and effect.

SECTION 9. Repealing Clause. - All laws, decrees, ordinances, rules and regulations, executive
or administrative orders, and such other presidential issuances that are inconsistent with any of

the provisions of this Act are hereby repealed, amended or otherwise modified accordingly.
SECTION 10. Effectivity. - This Act shall take effect on January 1, 2012.

Approved,