Question & AnswerQ&A (NTA MEMORANDUM CIRCULAR NO. 61-A AMENDING MEMORANDUM CIRCULAR NO. 61)
Republic Act No. 7171 is an Act to promote the development of farmers in the Virginia tobacco-producing provinces and provides for their share equivalent to 15% of the excise taxes on locally manufactured Virginia type cigarettes.
The Department of Budget and Management (DBM), the Bureau of Internal Revenue (BIR), the National Tobacco Administration (NTA), and the Local Government Units (LGUs) of provinces producing Virginia tobacco, including municipalities and cities, are covered.
The DBM must include in the Internal Revenue Allotment an amount equivalent to 15% of the excise taxes on Virginia type cigarettes, determine qualified beneficiary provinces, compute their shares, and issue funding checks to LGUs based on NTA certification and BIR collections.
The BIR collects and sets aside 15% of excise taxes on locally manufactured Virginia type cigarettes and submits certification of the amount set aside to the DBM for budget preparation.
The NTA documents and reports Virginia tobacco production and acceptances, provides certifications of production by province and LGUs to the DBM and LGUs, and approves these certifications.
The fund is computed based on actual BIR collections of excise taxes on locally manufactured Virginia type cigarettes for the second calendar year preceding the year of distribution.
Qualified beneficiary provinces must have an average annual Virginia tobacco production of not less than one million kilos for the immediate past two years, as certified by the NTA and approved by the NTA Administrator.
The fund is shared as follows: 30% to the provincial government, 40% to municipalities and cities (with half equally divided and half based on tobacco production volume), and 30% to municipalities and cities in congressional districts based on tobacco production, with 50% of LGU shares used for barangay economic development projects.
Funds must be used for cooperative projects improving product quality and farmers' income, livelihood and alternative farming projects, agro-industrial projects enabling farmer management and ownership, and infrastructure projects such as farm-to-market roads.
LGUs must record receipts and disbursements separately and ensure projects funded are duly approved by their respective legislative councils through an appropriation ordinance or resolution.