AT a time it is scrounging for funds, the Philippine government stands to lose P60 million (about $1.24 million) in revenue every year if it decides to lower the tariffs for rice imports outside the Asean region to 35 percent.
The Tariff Commission said so in its investigation report, a copy of which was obtained by the BusinessMirror.
The Tariff Commission reported their findings during the February 24 meeting of the Cabinet-level Committee on Tariff and Related Matters (CTRM).
A person familiar with the matter informed the BusinessMirror it was during this meeting when the body that advises the President on international economic issues agreed to recommend the 1-year reduction of tariffs for in-quota and out-quota rice imports outside the Association of Southeast Asian Nations (Asean).
In its presentation, the Tariff Commission said estimated foregone revenue on importations from India, Pakistan and other non-Asean sources is approximately P60 million every year if the most favored nation (MFN) tariff rates on rice are reduced to 35 percent.
According to another source who was present during the CTRM meeting, India and Pakistan were highlighted because they are “major rice suppliers.”
At present, rice imports within the minimum access volume (MAV) or in-quota are slapped with 40-percent tariff while those outside the MAV are levied with 50-percent tariff.
“Imports from Pakistan would account [for] 57-percent of revenue foregone while imports from India would account for three percent,” the Tariff Commission said in its report.
Of the total estimated foregone revenue of P59.96 million, P34.19 million would come from rice imports from Pakistan, P23.91 million from other MFN countries and P1.86 million from rice imports from India.
The Tariff Commission believes the tariff reduction of rice imports to 35 percent could lead to lowering rice prices as this move would translate to cost savings.
“Based on available data, importing rice is a profitable business with estimated profit margins of at least 20 percent. If tariffs are reduced to 35 percent, [the Commission] estimates cost savings of at least three percent,” the Commission said in its report. “These savings can be retained by traders as additional profits or passed on to consumers in the form of lower prices.”
The Department of Agriculture (DA) earlier said the move to lower the MFN tariff on rice imports to 35 percent was aimed at expanding the options of traders for sources of rice imports.
The CTRM is chaired by the Trade and Industry Secretary and co-chaired by the National Economic and Development Authority (Neda) Director General.
Its members include the Executive Secretary, the Secretaries of Agriculture, Budget and Management, Labor and Employment, Agrarian Reform, Finance, Foreign Affairs and Environment and Natural Resources. The Central Bank governor and the chairman of the Tariff Commission are also part of the CTRM.
Under existing laws, the Commission is mandated to conduct investigations on tariff adjustments. It submits a recommendation to the Neda, which subsequently makes its final recommendation to the President to issue an executive order (EO) to modify tariffs.
However, the power of the President to modify tariff rates is only in effect when Congress is not in session.
Congress is currently in session and would only be in recess starting tomorrow, March 27.
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