English
Philippines: Rice tariff bill passage to arrest inflation — FEF
MANILA, Philippines — The Foundation for Economic Freedom (FEF) is urging Congress to immediately pass the Rice Tariffication Act to avoid prospects of runaway inflation.
In a statement issued Wednesday, the policy advocacy group said the liberalization of rice trade in the country would bring down inflation by 0.4 percentage point as rice prices fall by P7 per kilo. Doing so would alleviate food inflation, which hits the poor the hardest.
“We support the call of the government economic managers to Congress for the immediate passage of the Rice Tariffication Act to address rising inflation,” said FEF. “Rice tariffication is a win-win situation for all.”
Inflation spiked to 4.6 percent in May, slower than market expectations, but still faster than the 4.5 percent in April and 4.3 percent in March. Economic managers interpret this as an indication that it is nearing its peak and would taper off soon.
Replacing the quantitative restriction for rice with tariffication would enable the government to raise revenues which can be used to directly assist affected rice farmers and to fund programs to raise the productivity of rice farms, FEF said.
The group said it would also alleviate the pressure to raise wages as reduced food prices would increase the disposable incomes of wage earners. Increases in wages at this point “will further stoke inflation and hurt the poor in the long-run,” it said.
“It will help the majority of rice farmers since many rice farmers are net consumers of rice, just eating what they planted in the harvest season, but buying rice in the market during the lean season,” FEF said.
Tariffication would also curb losses incurred by the National Food Authority (NFA) in its rice subsidy program and stop a further rise in NFA’s debt, which is guaranteed by the national government.
Food security is also expected to be strengthened because the private sector can freely import from various sources.
“Since the private sector can respond more quickly to market demands without the need for bureaucratic approvals and public bidding, rice supply can be more stable,” said FEF.
FEF is also discouraging calls against the suspension of the implementation of the first package of the Tax Reform for Acceleration and Inclusion (TRAIN), also known as TRAIN 1, as it would deprive the government of revenues for social programs meant for the poor.
“To those who say that the government must help the poor, the answer is not to roll back TRAIN 1, which will generate revenues for infrastructure and social programs meant for the poor, but to liberalize rice importation,” said the group.
Source: https://www.philstar.com/business/2018/06/08/1822480/rice-tariff-bill-passage-arrest-inflation-fef#f0kFZvIGoIWAYVQ4.99