Gov’t urged to consider uniform tariff structure

The Management Association of the Philippines (MAP) urged the government to keep tariffs low and uniform for agricultural and food products to keep food prices affordable for more Filipinos.

The MAP said in a position statement that the government should consider a tariff structure that “reduces incentives and opportunities for corruption and smuggling by unifying the minimum access volume (MAV) and non-MAV tariff rates.”

It said that tariffs should be kept “relatively low and uniform across all goods with a maximum 10-15%” to ensure the affordability of food prices.

The MAP issued the position paper as the National Economic and Development Authority (NEDA) and Tariff Commission (TC) are moving to review and reform the tariff structure of the Philippines.   

“The removal of existing peaks and achieving low uniform rates in a tariff structure that provides equal incentives across domestic industries will encourage more and wider agricultural processing and value-adding, help control inflation, and enhance the country’s food security. We urge the TC and NEDA to move the Philippine economy in this direction,” the MAP said in the paper signed by MAP President Benedicta Du-Baladad and MAP Governor-in-Charge for Resilience and Recovery Cluster and former NEDA Secretary Cielito F. Habito.

The MAP noted that agricultural tariffs have remained high as these are generally excluded from tariff adjustments “with agricultural products deemed ‘sensitive’ levied the highest statutory rates of up to 65%.”

“This exceptional level of protection has dampened the impetus for government and agricultural producers to achieve higher levels of productivity, hence, lower costs and prices, to be comparable to and competitive with that of our neighbors,” it said.

The MAP recommended that agricultural commodities with high tariff rates should be reviewed for reduction.

“Most of the agriculture commodities with very high tariffs are food products (sugar, meat, fish, rice) or inputs to local manufacturing and value addition (corn, meat, fish, sugar, etc.). These commodities are prominent and crucial in family food consumption, food security, and general inflation,” it said.

The MAP said the Philippines should have a “rational tariff structure” in which tariff rates on inputs do not go beyond the tariffs imposed on finished products.

“High tariffs have long been shown to be counter-produc-tive, and lead to reduced investment, low or stagnant wages, and higher rates of malnutrition. Using protective trade policy to help farmers causes unwanted collateral damage to the much wider mass of consumers, especially the poor who suffer the long-term consequences of high-priced food,” it said.

Sought for comment, Foundation for Economic Freedom President Calixto V. Chikiamco said he agreed with the MAP’s proposal but suggested that variable tariffs be allowed. 

“If I may tweak it a little bit to allow for variable tariffs, a bit higher during the harvest season and a bit lower, during the lean season,” Mr. Chikiamco said via mobile phone. “The variable tariffs help to mitigate the downward pressure on domestic prices during harvest season. Also, this is politically more acceptable to the farmers.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the MAP’s proposal could address surging food prices and curb inflation.

“This is one effective way to further bring down food prices and overall inflation, as one intervention measure that the government can implement by reducing and unifying import tariff rates on imported food products, while also reducing the opportunity for smuggling brought about by the relatively higher tariffs,” Mr. Ricafort said.

“One benefit is the lower retail food prices for consumers, in terms of reduced import tariffs passed on to them as savings,” he added.

In March, the TC started the comprehensive tariff review program of the Most Favored Nation Tariff Schedule from 2024 to 2028. The tariff review is done every five years as provided under Republic Act No. 10863 or the Customs Modernization and Tariff Act.

The review covers tariffs for various items including agriculture and food products; chemicals and chemical products; textiles, paper and leather products; metal and non-metal products; and machinery and transport equipment. — Revin Mikhael D. Ochave