To bring down inflation, the Department of Finance (DOF) wants to cut tariffs on rice imports below 35 percent to pull down retail prices of the staple, a major inflationary pressure.
Finance Secretary Ralph Recto wants to reduce tariff to 20 percent in September and is looking at further cutting it to 17.5 or 20 percent from the current 35 percent.
Tariff on imported rice is at 35 percent, until the end of 2024, by virtue of Executive Order 50. Without a tariff cut, the Philippines slaps 40 percent (in quota) and 50 percent (out quota) on rice imports.
All rice imports from Southeast Asian countries are levied a 35 percent tariff pursuant to the ASEAN Trade in Goods Agreement, reported the Philippine Star.
World prices have been sliding, which bodes well for an importing country like the Philippines, Recto said, and rice imports comprise 20 percent of the rice inventory of the country.
The declining world prices for rice along with tariff reduction can lead to more affordable prices of the staple being sought by the consuming public, Recto said.
Reducing tariffs
The DoF is looking at the power of the President to change the tariff rates when Congress is not in session.
Recto said the Tariff Commission (TC) is expected to begin reviewing the proposed rice tariff cut soon.
Recto, however, said they are not looking at reducing rice tariffs to zero as it would be detrimental to local rice farmers.
“You have to strike a balance between the farmers and the consumers,” he said.
Recto expects the Department of Agriculture to conduct its own consultation with its stakeholders regarding the proposed tariff reduction.
The rice tariff adjustment may be done while Congress is not in session so that Marcos can exercise his power of modifying tariff rates on goods through an EO.
The lower rice tariffs may be in effect until the end of the year.
“We want it lower… as much as possible not only up to the end of the year. But (it is) possible (that) the EO will be only up to the end of the year,” Recto said.
“And then, let’s take a look, and then if we need to extend it, then we can extend it, right? But what’s important is to reduce the prices of rice. That is what the Filipino public is asking,” Recto added.
Congress adjourned last May 24 and will reopen on July 21.
Recommendations
The tariff adjustment process begins with the TC holding a public hearing regarding a tariff modification petition filed by either a private entity or the government.
The TC will submit its findings to its mother agency the National Economic and Development Authority (NEDA) for proper endorsement to the Cabinet-level Committee on Tariff and Related Matters (CTRM).
The CTRM will deliberate on the proposed tariff modification and make its recommendation to the NEDA board chaired by the President for final action, including the issuance of an EO.
The average price of well-milled rice in the country softened to P56.42 per kilo in April from the record-high P56.44 per kilo recorded in March, according to the Philippines Statistics Authority (PSA).
Rice inflation softened to 23.9 percent inflation in April from 24.4 percent in March, based on PSA data.
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