Tariff cuts impact on inflation ‘insignificant’— CTRM report

The inter-agency body tasked to review the impact of the planned reduction in tariffs of key commodities found that the proposal would not be significant to fight the skyrocketing consumer prices.

Based on a document from the joint meeting of the Technical Committee on Tariff and Related Matters (TCTRM) and Committee on Tariff and Related Matters (CTRM), the cut in tariff rates would likely result in around 0.03 percent to 0.446 percent decline in inflation.

Earlier, the Duterte administration was considering removing the tariffs on some agricultural products, like corn, feed wheat, fish, vegetables and meat, to address inflation, which already accelerated to 5.7 percent in July.

“NEDA [National Economic and Development Authority] estimated that the reduction in tariff to zero of these products is likely to reduce inflation by 0.446 percent. BSP [Bangko Sentral ng Pilipinas] concurred with this assessment,” the document obtained by Manila Bulletin read.

The Department of Finance (DOF), on the other hand, gave a much lower estimate of only 0.03 percent.

“The CTRM determined that based on findings of the Tariff Commission that most of agricultural products are imported already from FTA [free trade agreement] partners and are therefore either at zero tariff or at preferential rates,” the report said.

For fish in particular, the TCTRMCTRM noted that almost 50 percent of the importation, which mainly came from China, Vietnam and Japan, are already subject to zero duty, while 45 percent of offal fish are “presumably” used for feeds and raw materials of food manufacturers. The tariff rates of offal fish range from five percent to 10 percent.

“Most of the fish requirements of the country particularly those commonly purchased by the Filipino families are locally sourced like tilapia, galunggung and milkfish. For tuna 84.76 percent are locally produced and the rest are imported,” the report said.

For vegetables, the country’s top imports — garlic, onions and potatoes — have a uniform tariff rate of 40 percent.

But Agriculture Secretary Emmanuel F. Piñol warned during the meeting that a further reduction in traffic rate on these agricultural products could dampen their already lower retail prices in the local markets. The proposed lowering of meat tariffs, meanwhile, may not have significant effect, citing the price of local pork is stable, while for beef, its landed cost may only drop by 18, well below the current average market price of 1280 to 1320 per kilo.

Instead of lowering the tariffs, the TCTRM-CTRM recommended that “volume enhancement measures could better help alleviate temporary supply constraints without unduly penalizing farmers and local producers.”

Aside from increase in volume, the agriculture department suggested that several administration measures to weaken inflation pressure, including the lifting of the banned on imported galunggung.

Piñol was also asking the Department of Finance and the Bureau of Customs to temporally lift the special safeguards duties on poultry.

Earlier, Finance Secretary Carlos G. Dominguez III said they were to the proposal to reduce the tariffs imposed on four agricultural products despite the potential revenue losses once the plan is implemented. Dominguez, however, admitted that the proposal was “uncertain.”

“That was a suggestion, we are studying it, but I’m a little bit uncertain now on what is really the conditions from some people from the House [of Representatives]. I’m not sure I listened to one interview and it was saying that they’ll make some changes,” Dominguez said.

Based on the DOF estimates, the proposed reduction in the tariffs of chicken and fish alone would result in 12.8 billion in foregone revenues.