DoF estimates PHP10B in foregone revenues from lower rice tariffs

The Department of Finance (DoF) proposal to further lower the tariffs on rice imports is estimated to bring down prices by as much as P5 per kilo, but also result in around PHP 10 billion in foregone revenues.

“Our current estimate is less than PHP 10 billion in (foregone) revenues if the (tariff cut) is implemented,” Finance Undersecretary and Chief Economist Domini S. Velasquez said in mixed English and Filipino at a forum on Wednesday.

Finance Secretary Ralph G. Recto earlier proposed to lower tariffs on rice imports to 17.5%, from the current 35%, to bring down prices of the staple.

Agriculture Assistant Secretary and Spokesperson Arnel V. de Mesa said the proposed tariff reduction could help bring down the price of imported rice by as much as PHP 5 per kilo.

“If we lower the (tariff) to 17.5%, the reduction (in prices) will be big. Our initial estimates, we see about PHP 4 to PHP 5 reduction,” he said.

As of May 28, the average retail price of imported well-milled rice rose to PHP 52-PHP 54 per kilo from PHP 40-PHP 46 a year ago. Imported regular milled rice ranged from PHP 49-PHP 51 to PHP 37-PHP 38.

Meanwhile, local well-milled rice ranged from PHP 48-PHP 55 per kilo, higher than the PHP 39-PHP 46 band in the year-ago period. Regular milled rice averaged PHP 45-PHP 52 from PHP 34-PHP 42 previously.

Ms. Velasquez said the government generates some PHP 30 billion in tariff revenues from the implementation of the Rice Tariffication Law (RTL).

However, she said the potential drop in revenues is not an issue if the tariff reduction will help bring down prices of rice.

“On the DoF’s part, we’re willing to forego that tariff loss just to make sure inflation is down,” she added.

Ms. Velasquez said that the discussions on the tariff proposal are still in the early stages.

“I think (the proposal) is 15% to 20%. Before, when rice prices increased, there were even requests of 10%,” she said.

In December, the government approved the extension of the reduced most favored nation tariff rates on several commodities, including rice, until Dec. 31, 2024. Tariff rates for imports of rice were kept at 35% for shipments within the minimum access volume quota and for those exceeding the quota.

As of April, the government has collected PHP 16 billion from rice tariffs.

The Philippines imported 1.89 million metric tons (MT) of rice as of early May, data from the Bureau of Plant Industry showed.

Ms. Velasquez said global rice prices are easing but there are still pressures due to the lean season.

“We saw that prices in the market this May are already easing from April… We hope that lowering the tariff will help, especially during the lean season.”

Mr. Recto earlier said the retail price of rice could drop by as much as 20% by September. — Luisa Maria Jacinta C. Jocson