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Thursday, March 28, 2024

Government likely lost ₧.5B in tariff cuts on agri imports

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THE government may have lost over half a billion pesos in tariff collections due to Executive Order 171 which reduced tariffs on imports of various commodities, according to the Federation of Free Farmers (FFF).

These losses, FFF said, should be enough reason for President Ferdinand Marcos Jr. to reject his economic managers’ proposal to retain lower tariffs on imported rice until the end of 2023.

In terms of rice importation, FFF said, rice from Pakistan would have been competitive against those from Vietnam, the largest exporter to the Philippines, even if the former’s tariff had been retained at 50 percent.

“Although imports from Pakistan and other countries outside ASEAN arrived at a cheaper price because of lower tariffs, ordinary consumers did not benefit because most of the imports were for premium grades of rice. If ever traders passed on any cost benefits to consumers, the beneficiaries were the rich consumers of Indian Basmati rice, Japanese sticky rice, or exotic rice dishes in five-star restaurants,” said Raul Montemayor, FFF National Manager.

Montemayor saw no additional benefit to the country in extending EO 171, since Pakistan is poised to curtail its rice exports in the coming months following massive floods that hit its rice production areas.

Moreover, India, the only realistic alternative to Pakistan, imposed a 20-percent tax on its rice exports in order to preserve its own stocks following similar climatic disturbances.

“Instead of looking outside ASEAN, the Philippines should reduce its dependence on Vietnam by developing supply arrangements with other ASEAN countries like Cambodia and Myanmar. This strategy will not require any tariff adjustment, will not incur any losses in customs duties, and will even improve our trade relationships with our ASEAN neighbors,” Montemayor said.

In a hearing conducted by the Tariff Commission last November 9, the FFF argued that EO 171 failed to achieve its objectives of diversifying the country’s sources of imported rice and stabilizing prices.

Instead, FFF said, it benefited only a few importers and rich consumers of rice, while depriving the government of more than half a billion pesos in tariff revenues.

Data culled by the FFF from the Bureau of Customs (BoC) showed that, while the number of non-ASEAN exporters increased after EO 171 took effect in June 2022, only Pakistan was able to sustain its shipments to the country.

The Philippines has remained heavily dependent on ASEAN suppliers, which accounted for 94 percent of total imports.

“The economic managers have perfected the habit of abusing the power that was merely delegated to the Executive by Congress.  There is no rice crisis, and not a single petition has been filed in Congress to extend EO 171.  Why are the economic managers pushing for its extension and bypassing Congress by waiting for it to adjourn?” Montemayor said.

He also questioned the apparent ploy of the economic managers to wait for Congress to adjourn for the Christmas break and then ask the President to approve the extension of EO 171 through another Executive Order.

By law, the President can change tariffs to address urgent concerns only when Congress is not in session.

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