MANILA, Philippines — The Department of Finance (DoF) said the government stands to lose “less than P10 billion” in revenues by further reducing tariff rates on rice temporarily—an amount that the agency said it was willing to forego just to tame inflation.
While the projected revenue loss from lower rice import duties was still based on preliminary estimates, Finance Undersecretary Domini Velasquez said the amount won’t matter that much if the measure can bring down the prices of the staple grain by P4 to P5 a kilo.
“So, on the DOF’s part, we’re willing to forego that tariff loss just to make sure that inflation, also, is down,” she said during the Kapihan sa Manila Hotel on Wednesday.
Last Monday, Finance Secretary Ralph Recto said the government wants to temporarily reduce rice tariffs below the already lowered rate of 35 percent to bring down the prices of the commodity.
READ: More cuts to rice tariffs urged to tame inflation
President Marcos issued Executive Order No. 50 last year to maintain the reduced tariff rate of 35 percent on rice until the end of 2024. That presidential order also extended the effectivity of lowered import duties on corn and meat products to tame stubbornly high inflation.
Bringing down prices of rice
Recto said rice tariffs could be further reduced to between 15 and 20 percent and “presumably” stay at those rates until the end of the year. The lowered tariff rates on rice, he explained, could help bring down the domestic cost of the staple grain by 20 percent in September, when global prices of the commodity are projected to go down.
The Tariff Commission would have to conduct a public hearing on the proposal “soon” while the agriculture department would be consulted before Marcos can issue another EO modifying the rates, the finance chief explained.
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However, the plan was already met with opposition from farmers groups, which doubted the effectiveness of the proposal as rice prices remained high despite the import liberalization under the Rice Tariffication Law.
Some groups also said that further cuts on import duties would reduce the Rice Competitiveness Enhancement Fund, a P10-billion annual allocation generated from surplus tariff collections to boost domestic production.
As of April, the state has collected P16 billion in rice tariffs to assist local farmers.