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Philippines: P2.8-B revenue loss seen from lower tariffs
Lower tariffs on chicken and fish products could result in nearly P3 billion in potential revenue losses for the government, a senior Finance department official said.
“For two products (chicken and fish) it’s about P2.8 billion,” Finance Undersecretary Gil Beltran told reporters when asked about the potential revenue loss if tariffs were reduced to a uniform 5 percent.
The higher import volumes expected, however, will provide an offsetting effect.
“If you don’t zero out the rate — if you leave a 3 to 5 percent rate — you will gain some higher volumes. [In turn], we will collect more because the volumes will more than make out for the reduction,” he explained.
House Speaker Gloria Macapagal Arroyo has reportedly proposed that tariffs on fish imports be cut to zero as part of efforts to lower inflation, which hit a new five-year high of 5.7 percent in July.
Duties on other products such as meat and vegetables should also be reduced and legislators have said that this can be accomplished by an executive order from President Rodrigo Duterte.
Tariffs on these products currently range from 10 percent to 40 percent.
Last week, Budget Secretary Benjamin Diokno said that economic managers were “leaning towards” endorsing a uniform 5-percent cut for corn, fish and meat imports.
Beltran, meanwhile, pointed out that tariffs decisions “have to be balanced out.”
“If you want lower prices for agricultural products you have to lower domestic protection a little bit so you have to balance that,” he said.
Public consultations must also be conducted.
“It’s a balancing act between looking at the level of protection for producers and consumer interest,” he said.
Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo, meanwhile, said it would be “very difficult” to estimate how much of an impact lower tariffs would have on inflation.
“On the balance, if you lower the tariff, the prices will also go down but it’s very difficult to quantify,” he told reporters at the sidelines of a Senate hearing on Thursday.
Guinigundo said one could not claim that lower tariffs would have a huge impact on inflation because other supply factors needed to be considered.
“We know that, let us say, year-to-date meat products as well as fish products have one of the highest inflation rates. Now, there are other aspects why these are very high other than probably the level of tariff duties at this point.”
“So it’s a difficult question how much is going to help reduce inflation in the process,” he claimed.
Headline inflation has risen to 4.5 percent year to date, above the 2.0-4.0 target for 2018. Bangko Sentral data showed that fish and meat contributed 0.7 percentage point and 0.4 ppt, respectively, to inflation in July.
Source: https://www.manilatimes.net/p2-8-b-revenue-loss-seen-from-lower-tariffs/431248/