Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
Second Regular Session

HOUSE BILLNo._ 82 1?

Introduced by HON. VICTOR F. ORTEGA and HON. EUFRANIO C. ERIGUEL, M.D.

EXPLANATORY NOTE

Republic Act No. 8240 was enacted in November 22, 1996 and took effect on January 1,
1997. One of its objectives, according to Section & of the said Act is to create a fund from
fifteen percent (15%) of the incremental revenue collected from the excise tax on tobacco
products. This fund shall be “exclusively utilized for programs in pursuit of the following
objectives:

(@) Cooperative projects that will enhance better quality of agricultural products and
increase income and productivity of farmers;

(®) Livelihood projects particularly the development of alternative farming system to
enhance farmer's income;

{e) 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.”

Since 1997 these farmers have greatly benefitted from the projects and programs
implemented by the local government units, which includes construction and improvement of
farm-to-market roads, bridges, and other infrastructures, being in accordance to the said
abovementioned objectives of the law,

On the other hand, in November 3, 2009, the Department of Budget and Management
(DBM), the National Tobacco Administration (NTA) and the Bureau of Internal Revenue (BIR)
issued Joint Circular 2009-1 implementing Section 8 of R.A. 8240. Item 4.3 of the said Joint
Circular which provides for “The respective shares of the LGUs shall be utilized for the
_following projects consistent with Section 8 of R.A. 8240” and uses the same enumeration as in
the said law.


The DBM now is of the opinion that the enumeration under Section 8 of R.A. 8240 as
implemented by Joint Circular 2009-1 is exclusive, thereby disallowing projects ‘not
specifically mentioned such as infrastructure projects. Because of this, for the year 2011 there
has been no infrastructure projects implemented unlike in the past 14 years.

Itis our view that Section 8 of R.A. 8240 should have been interpreted relative to R.A.
7171 as intended by the lawmakers who crafted . This is the reason why the objectives of R.A.
8240 are similar to those of R.A. 7171 or “An Act to Promote the Development of the Farmers
in the Virginia Tobacco-Producing Provinees” which provides that fifteen percent (15%) of tax
proceeds from locally manufactured Virginia-type of cigarettes shall be used for four different
types of projects, including “(d) infrastructure projects such as farm-to-market roads.” Why
should the proceeds from Burley and Native Tobacco be any different?

This Bill seeks to amend R.A. 8240, specifically including in its objectives
“infrastructure projects such as farm-to-market roads,” hence making it similar to RA.
‘7iTand avoid conflicting interpretations of Section 8 of R.A. 8240. With this amendment,
which will be provided in a Republic Act and not just in a Circular, the proceeds from tax
collected from ail types of local tobacco plants ~- whether Burley, Native, or Virginia Tobacco —
may be used for cooperative, livelihood and agro-industrial projects, as well as infrastructure
projects, all for the benefit of our tobacco farmers and their families and communities.

In view of the foregoing, the passage of this Bill is earnestly sought.

Qeers/

VICTOR F. ORTEGA EUFRANII RIGUEL, M.D.
1* District, La Union Pa La Union


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
Second Regular Session

HOUSE BILL NO.__°*"

Introduced by HON. VICTOR F, ORTEGA and HON. EUFRANIO C. ERIGUEL, M.D.

AN ACT
EXPANDING THE ALLOCATION AND UTILIZATION OF THE INCREMENTAL
REVENUE TAX COLLECTED FROM THE EXCISE TAX ON TOBACCO
PRODUCTS, AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 8240
ENTITLED “AN ACT AMENDING SECTIONS 138, 139, 140 AND 142 OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES”

SECTION 1. Section 8 of Republic Act Number 8240 is hereby amended to read as
follows:

“Section 8. Fifteen percent (15%) of the incremental revenue collected from the excise
tax on tobacco products under this Act 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:

(a) Cooperative projects that will enhance better quality of agricultural products and increase
income and productivity of farmers;

(6) Livelihood projects particularly the development of alternative farming system to enhance
farmer's income;

(©) 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; and

(d) Infrastructure projects such as farm-to-market roads.”