P13.3-B foregone revenues seen

THE PHILIPPINE government’s decision to cut tariffs on rice amid low supply and soaring prices has resulted in P13.3 billion in foregone revenues to date, according to the Bureau of Customs’ (BoC) data submitted to the House of Representatives.

The state collected only P9.3 billion in rice duties from July to Dec. 6, 59% lower than the supposed P22.6-billion collection if the government did not cut rice tariffs earlier in the year.

In June, President Ferdinand R. Marcos, Jr. issued Executive Order (EO) No. 62, which reduced rice import tariffs to 15% from 35% to address soaring prices of rice products in mid-2024.

“While this may be the cost of EO No. 62, its benefit to the public outweighs the potential collected revenue by the Bureau of Customs,” Customs Commissioner Bienvenido Y. Rubio told congressmen.

Philippine authorities were hard-pressed to reduce the retail costs of the staple food in early 2024, when prices averaged between P50 to P65 per kilogram and rice inflation hit 24.4%, the fastest since February 2009.

The tariff cut order reduced the landed cost of imported rice to P33.93 per kilo from P40.26, said Mr. Rubio. He explained that landed costs of goods are composed of freighting fees, buying price of the product and its declared value, and their collected duties and taxes.

However, lawmakers during the House hearing raised concerns over the possible existence of a rice cartel, accusing rice importers and traders of collusion to keep the prices of the staple food artificially high despite reduced import tariffs.

Party-list Rep. Erwin T. Tulfo said there is a disparity between the landed costs of imported rice and its retail prices. “The customs said [the costs] are P33… why is it being sold at the markets at P50?” he asked in Filipino.

November data from the Philippine Statistics Authority showed that the average price of regular milled rice is P49.24 per kilo, with well-milled rice being sold at P54.64 per kilo. The average per kilo of special rice stood at P63.

Marikina Rep. Stella Luz A. Quimbo stated that rice importers and traders could have amassed profits of around P13 billion by hoarding rice stocks and keeping prices high, despite a June order to reduce rice tariffs.

“It’s in the hands of the importers and traders who have profited by P13 billion due to the tariff reduction,” she said in Filipino — Kenneth Christiane L. Basilio