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Revenue loss of pork tariff cuts manageable–DOF

A vendor arranges pork meat at a stall in Commonwealth Market in Quezon City in this file photo.

THE revenue impact from the lowering of pork tariff rates for one year is considered “manageable” and would easily be offset if imports increase, a Finance official said Thursday, after President Duterte approved the Department of Agriculture’s recommendation for such.

The chief of the Senate’s Economic Affairs committee, however, deplored the tariff reduction, saying the revenue forgone from such could have been used for urgent response to the impact of the African swine fever (ASF) and Covid-19 pandemic.

“In the greater scheme of things, the price impact to consumers outweighed revenues foregone for the proposal. The increase in welfare benefits to the Filipino people outweighed revenue foregone concerns,” Finance Assistant Secretary Maria Teresa Habitan said in a message to the BusinessMirror.

“If imports grow, that would easily be offset naman [anyway],” she added.

Habitan clarified that the government’s recommendation to increase the minimum access volume (MAV) or import quota was prompted by the need to “alleviate supply issues and the upward pressure on pork prices” and not to offset the revenue impact.

On Thursday, Albay Rep. Joey Salceda said the lowering of pork import tariff rates as proposed by DA spells an annual foregone revenue of P1.9 billion, citing Tariff Commission estimates.

For in-quota pork imports, the tariff rates would be drastically cut to 5 percent from the current 30 percent for the first three months of effectivity of EO. This will then be raised to 10 percent in the succeeding nine months.

On the other hand, the levy for out-quota pork imports for the first three months will be slashed to 15 percent from the current 40 percent. It will then be increased to 20 percent for the next nine months.

Despite the revenue impact due to pork tariff rate reduction, economists backed the government’s move, saying this is a good “trade-off” to address inflation.

Asian Institute of Management (AIM) economist John Paolo R. Rivera conceded the move will reduce revenues which can be used for pandemic response, but said “helping the consumers survive the pandemic with less decline in their already low purchasing power can be deemed as an indirect and non-medical support for consumers to survive the pandemic rather than an outright ayuda.”

“In the short run, while it’s detrimental to governmen’ funds, it’s good for consumers, who badly need any form of support to make pandemic life bearable. It’s a trade-off,” Rivera told the BusinessMirror in a message.

UnionBank Chief Economist Ruben Carlo Asuncion also said this is the way to go for the government, given that lowering pork tariff rates would have a “huge” impact on inflation.

“The issue here really is keeping inflation on target. It will be more costly if inflation is not eventually tamed especially in a pandemic,” Asuncion said.

Foundation for Economic Freedom President Calixto Chikiamco called the tariff reduction a “right move,” adding, “At this point, government is not focused on the tariff revenue loss but is focused on the need to subdue food inflation.”

De La Salle University Maria Ella Oplas said this is a “better strategy” as imported pork will increase supply in the market. It was a “good idea” for the government to impose a price ceiling instead on imported pork to protect the local industry and enable them to compete with pork imports, she added.

“So I think this is a win-win solution for consumer and producer,  as well as local producers and importers. If the concern is tax collection, this is now the time for the government to be ‘creative’ in terms of revenue generation,” she added.

Oplas and Rivera agreed it’s time for the government to cut unnecessary expenses to save money for its pandemic response.

“So I would like the government to go back and check its own backyard. Who are the non-performers? Who are the non-essentials and redundant offices that we continue to maintain? Review the benefit packages that we are giving to government employees. In times like this we all need to do little sacrifices. Why can’t they?” Oplas said.

Rivera suggested the government cut down on too much paper work by shifting to digitalization and limiting personal appearances.

“Other than levying further taxes and foreign borrowings, government can learn something from the private sector in tightening belts—more than cutting costs, government can cut waste by reducing bureaucratic processes that consume resources but do not add value for the people. You can just imagine the savings that can be generated,” he said.

For Asuncion and Chikiamco, the government can pursue imposing digital tax in the future to raise revenues.

Apart from digital tax, Chikiamco said, “The BSP [Bangko Sentral ng Pilipinas] can purchase dollars in the open market and also signal that it would like to see the peso depreciate.”

Marcos castigates DA

The DA, meanwhile came under fire from Sen. Imee Marcos Thursday for “crippling” the Duterte administration’s ability to raise revenue to cope with ASF and Covid-19.

Marcos, who chairs the Senate Committee on Economic Affairs, castigated DA officials for giving Duterte “questionable advice” to sign Executive Order (EO) 128 on Wednesday, lowering tariffs, in the hope it can reverse supply shortage triggered by ASF.

“Aren’t we looking for more funding?” she asked, adding: “Where is the much touted whole-of-government approach?”

Lamenting what would be lost from lowering pork tariffs, the senator recalled in a statement Thursday that “the DA had assured pork importers of scandalous profits but has left the local hog raisers it is supposed to protect with a very sketchy plan.”

She noted the P1.5 billion that the DA allotted to the livestock industry in its 2021 budget is “measly, token support, knowing ASF has been around since 2019.”

The Sen. added: “Clearly, the main beneficiaries of the EO are foreign producers, foreign exporters, local pork importers, and perhaps corrupt government officials selling import licenses.” With Butch Fernandez

Image credits: Nonoy Lacza

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