Another Palace-Senate tiff looms over tariff cut on imported rice
MANILA, Philippines — Malacañang and the Senate may again be headed for another scrimmage after five senators on Wednesday filed a resolution urging President Rodrigo Duterte to withdraw Executive Order No. 135, which temporarily lowers the tariff on imported rice by 5 percent, at a time when the country is in dire need of funds for its pandemic response.
Senate Resolution No. 726, filed by Senate Minority Leader Franklin Drilon, Senators Francis Pangilinan, Nancy Binay, Leila De Lima and Risa Hontiveros, expressed concern that a lower tariff rate under EO 135 does not guarantee the sufficient supply of rice for the country.
“There is no reasonable and sufficient basis to reduce the tariff rates on rice and it will only cause more burden to our local rice farmers, further increase our import dependency and cost the government millions in foregone revenues,” the senators said in their proposed resolution.
The senators filed their proposed resolution just four days after the President signed EO 135, which cut the tariffs in accordance with Republic Act No. 10863, or the Customs Modernization and Tariff Act.
Malacañang and the Senate had just resolved a recent impasse on two measures, which sought to lower tariff rates and increase quotas on imported pork, moves that local hog raisers decried as devastating to the pork industry.
Ample supply
The executive department later agreed to scale down the rate cut and the increase in the import quota after senators threatened to strip the President of the power, granted by RA 10863, to modify tariff rates.
Under EO 135, the tariffs on rice imports would be lowered to 35 percent from the current 40-percent rate for those imported within the minimum access volume (MAV) and 50 percent for those outside the MAV.
But the Federation of Free Farmers (FFF) told senators there was no basis to cut the tariffs because Agriculture Secretary William Dar himself has said “there is an ample supply of rice” in the country following a “record harvest” in 2020.
Further, the FFF estimated that the tariff cuts would cost the government around P548 million in foregone revenues, higher that the estimate of the Tariff Commission, which said the government would lose at least P60 million in revenue per year if the tariffs on rice are cut to 35 percent.
The revenue losses, the senators said, would also result in the diminution of the Rice Competitiveness Enhancement Fund, created under the Rice Tariffication Law as a safety net for affected rice farmers.
The senators said the tariff cuts would also lower appropriations for “rice farmer financial assistance, titling of agricultural rice lands, expanded crop insurance program on rice, and/or crop diversification program” under the law.
“These programs depend on the excess of the P10-billion tariff revenues collected from rice importation,” the senators said.
“Aside from Vietnam and other (Association of Southeast Asian Nations) countries, the Philippines has been consistently importing from nine other countries including India and Pakistan, and, more recently, China. Similarly, there is no urgent need to augment our rice supply,” the Senate resolution said, quoting FFF.
Not sufficient
The resolution also cited Philippine Statistics Authority data, which showed that the rice inflation rate was -0.3 percent in April 2021; 0.9 percent in March 2021; and 0.5 percent in February 2021.
Senators also cited the admission of the National Food Authority which said that while the reduction in tariff rates would encourage the inflow of rice, such reduction is “not sufficient to warrant or guarantee the projected supply of rice in the country.”
The senators reiterated their previous stand that the power to fix tariff rates and import quotas is a essentially a mandate of Congress and only delegated to the executive department so Congress also has to concur with the executive’s use of such power.
