LGUs finally get revenue share from tobacco taxes

MANILA, Philippines - More than two decades after, local government units (LGUs) will finally receive their entire revenue share from tobacco excise taxes raised in 1991 and 1996, the Department of Budget and Management (DBM) said.

“These guidelines shall cover the release and utilization of the remaining shares of LGUs from the 2012 collection of tobacco excise taxes,” the agency said in Local Memorandum 71 issued Sept. 21.

A total P1.44 billion would go to the LGUs of Abra, Ilocos Norte, Ilocos Sur and La Union.

The money will come from budget savings the government generated last year.

The memorandum was issued pursuant to Republic Act 7171 and 8240 enacted in 1991 and 1996, respectively.

The two laws amended the National Internal Revenue Code and prescribed higher excise duties for tobacco products. In return, additional revenues as a result of these amendments would entirely go to LGU coffers.

Under RA 7171, incremental revenues will be divided as follows: 40 percent for cities and municipalities, 30 percent to the provinces and 30 percent to congressional districts.

RA 8240, on the other hand, prescribed an 80-10-10 share for districts, cities and provinces, respectively.

Last year, the DBM released P3.45 billion as partial payments to LGUs.

Aside from the division of shares, the latest memorandum also reminded the LGUs on the programs and projects to be financed by the said shares. Reportorial requirements were also laid out.

“The recipient LGUs shall ensure that the programs and projects to be implemented are included in the approved Annual Investment Program,” the budget agency said.

 “The fund shall be treated as trust by the beneficiary cities and municipalities,” it added.

Projects that could be financed by the shares are cooperative and livelihood programs for tobacco farmers, construction of farm-to-market roads, and establishment of post-harvest and secondary processing tools.

Training for tobacco farmers as well as financial support and tourism programs could  also be funded.

“The recipient LGU shall prepare quarterly reports on fund utilization and status of program/project implementation,” the DBM said.