Tobacco farmers ask probe into LGU tobacco excise tax use

By ACE ALEGRE
www.nordis.net

VIGAN CITY — Tobacco farmers are asking President Rodrigo Duterte and lawmakers to probe into how millions of the tobacco excise tax shares of their local governments were spent.

For nearly three decades now, benefits from tobacco excise tax shares of local government units have remained a tobacco farmer’s illusion.

With then Ilocos Sur lawmaker Luis “Chavit” Singson as its principal author, Republic Act 7171 or “An Act to Promote the Development of the Farmers in the Virginia Tobacco-Producing Provinces” was enacted in 1992, and alleged corruption from one administration to another has instead flourished, while the farmers continued to be deprived.

Today, midst another Congressional approval to hike tobacco excise taxes, hence, the LGU tax shares increase in the offing. Farmers have not given up on the funds raised from the tobacco excise tax meant to support the development of the tobacco production industry and its farmers livelihood. They now ask President Rodrigo Duterte and members of the House of Representatives to probe into how millions of the tax share for virginia tobacco raising towns/provinces was spent.

Iloko farmer-leader Bernard Vicente of the Federation of TobaccoGrowers in Ilocos Sur is citing as an example, the still unfinished almost P500M Farmer’s Convention Center in Vigan City, which they alleged is among the “ghost projects” where supposed excise tax funds went.
RA 7171 is specific with the kinds of projects that the LGUs can fund with their share from the tobacco excise tax. These are: cooperative projects that will increase the tobacco farmers’ income; development of alternative farming systems; agro-industrial projects that will be co-managed and eventually owned by tobacco farmers; and infrastructure projects, such as farm-to-market roads.

Under section 2 of the law and section 8 of RA 8240, 15 percent of the incremental revenue collected from the excise tax on tobacco products shall be exclusively utilized for programs to increase the income and productivity of tobacco farmers and to involve them in post-harvest and secondary processing such as cigarette manufacturing.

In an open letter to Duterte, farmers appealed to the President and Congress to review the FCC contract. The letter was also sent to Commission on Audit Commissioner Michael Aguinaldo and Ombudsman Samuel Martirez.

Vicente bewailed, since the contract for the construction of theproject was awarded in 2008, not even 10 percent was completed a decade after. Aside from which, the farmer-leader said, “the funds used in Farmers Convention Center should have been allocated to projects that will benefit us directly.”

The Commission on Audit report last 2017 had raised “doubts” on the validity, accuracy and fair presentation in the General Fund disbursements of Ilocos Sur amounting to P1.34 billion.
The mothballed P332 million tomato processing plant in Santa, also in Ilocos Sur, is another “white elephant” project financed by RA 7171.

A total of P86.142 million from Ilocos Sur’s tobacco tax share from1996 to 1999 was initially appropriated for the construction of that tomato paste plant. It was augmented by a P245.887-million loan from the Philippine National Bank. The plan was to source the payments to the PNB from succeeding remittances from RA 7171.

But COA had found that the construction project was overpriced by P24.7 million, benefiting a private contractor, NS International Inc.

The contractor was accordingly paid P73.5 million for civil works when the evaluated cost was only P48.7 million.

The Ilocos Sur provincial government also created the corporation — Ilocos Sur Tomato Paste Plant Inc. (ISTPP) — to manage the tomato paste plant. The COA though found, that the Sangguniang Panlalawigan did not authorize the creation of ISTPP. Thus, the provincial government was financing a private project.

Securities and Exchange Commission records show that the incorporators of ISTPP were private individuals, and Singson, then representing the provincial government, was the major stockholder.

Vicente also called out anomalies present in flue-curing barns and facilities using money from RA 7171. Thirty-four tobacco flue-curing and re-drying facilities were constructed but not without irregular transactions, he said.

In 1998, the Sangguniang Panlalawigan appropriated P76 million for the construction of 34 flue curing barns.

State auditors have found that the cost for the 34 barns was overpriced by P28 million, while COA also noticed cash advances totalling to P190 million granted to Singson for supposed payment for theflue-curing barns. The COA said the cash advances should not have been allowed since “these were not intended for petty expenses and the disbursement exceeding P15,000,” as set forth in a COA Circular in February 1997.

Singson reportedly failed to present liquidation documents for the cash advances but in August 2000, he showed documents when he exposed ousted Pres. Joseph Estrada’s alleged machinations to stash away with millions of the excise taxes.

Some P300 million of the RA 7171 fund was also found by COA to have been granted to an NGO in 1998. The Southern Ilocos Sur Federation of Tobacco Based Cooperatives, which had assets of only P215,000.00 and got the financial assistance to operate the Santa tomato paste plant.

But a total of P110.178 million out of the P300 million were not properly documented, COA said in the report, adding, its president, despite repeated requests, failed to submit the required papers to support its expenses.

After 2001, Singson ended his nine-year stint as governor and now Rep. Deogracias Savellano succeeded him.

The alleged irregularities continued. In 2003, the COA found that “improper charges” totalling P45.7 million were made by the Ilocos Sur provincial government against the tobacco excise tax fund.

The Ilocos Sur government also gave financial assistance of P37million to the Ilocos Sur Tomato Paste Plant Inc. (ISTPPI) that was not supported by liquidation reports also in 2003. Further investigation showed that the financial assistance was regarded as a donation instead of a loan to the ISTPPI.

Again in 2004, the COA noted disbursements totalling P85.6 million improperly charged against the tobacco excise fund.

Moreover, the provincial government granted another financial assistance to ISTPPI amounting to P20 million, despite the latter’s failure to liquidate the financial assistance it got in 2003.

Another NGO, Buying and Bulk Curing Center in Sinait, Ilocos Sur, got P31million as financial assistance.

In 2005, when Singson returned as governor, the provincial government, COA said, allegedly made another “improper diversion” totalling P72.5 million. For the third year, ISTPPI got P19.6 million, in spite of two previous COA notices disallowing it from receiving any funds.

“25 Years Of Tobacco Excise Tax”

For nearly three decades millions have been disbursed from the tobacco excise tax and allegedly handed to LGUs.

The budget department’s Local Budget Memorandum No. 71 dated September 21, 2015 and Memorandum Nos. 72 and 73 dated March 8, 2016 show that some P10.72 billion has been received by Ilocos region provinces from their share of the excise taxes on tobacco.

Ilocos Sur, Ilocos Norte and La Union received a total of P9.11 billion for the 359 million kilograms of tobacco produced in 2013, DBM also showed.

Likewise the finance department said that some P91.60 billion was collected from tobacco in 2016 and at least P120.66 billion in 2017.

Despite the huge taxes coming from the industry, laments Zaldy Alfiler, leader of the militant peasant group Solidarity of Peasants Against Exploitation (Stop-Exploitation),tobacco farmers still face unending troubles as these billions of funds are misused.

DBM shows that a total of 40 percent of the budget for LGUs in the Ilocos region are from the collected tobacco excise tax in the past five years. But these millions do not benefit tobacco farmers, Alfiler exclaims.

“Saan met a mapakpakinabangan dagiti mannalon gapu iti pananggamulo wenno discretion dagiti LGUs nu kasano a busbosen ti nasao a pondo,” (Farmers do not benefit from this because it is only on the discretion of LGUs how to spend the funds).

Most LGUs, Alfiler continues, disburse tobacco excise tax shares without referring to RA 7171’s defined purpose, citing anomalies that have surfaced about how Ilocos Norte also spent P1.5 billion including the questionable P66.45 million for multicabs, P193.4 million for medicines, books, sanitizer, Coaster vehicle, uniforms, sprayer andfoliar fertilizer all from from RA 7171 tax shares.

The P10.72 billion total shares of the Ilocos provinces could have well assisted the 37,000 tobacco farmers overcome their losses, Alfiler explains, citing irrigation facilities that would have watered 26,805 hectares or funded 4,765 good-quality tractors.

Ilocos Sur has been getting the “lion’s share” of the tobacco excise tax fund for local governments. Of the over P10.72B, 50 percent went to Ilocos Sur; 20 percent, La Union; I5 percent, Ilocos Norte; and 5 percent, Abra. The share corresponds to the volume of tobacco produced by each province.

Accordingly, tobacco tax share is divided into: 40 percent for the provincial government; 30 percent, municipal governments; and 30 percent, district representatives.

Based on this percentage, Ilocos Sur provincial government received P3 billion from 1999 to 2006.

At least a billion or (a third of that amount) was found by COA to have been misused or unaccounted for.

Singson, who has since become Narvacan councilor in 2016, is now running for the mayoralty post in the town, has remained unusually silent on the allegations. # nordis.net

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