The government is all set to suspend the impending P2 increase in the excise tax on fuel next year and liberalize the importation of rice—two measures aimed at curbing inflation.
Budget Secretary Benjamin Diokno said Wednesday the Palace has approved the recommendation of the country’s economic managers to suspend the scheduled increase in the excise tax on fuel in January.
“We already anticipated that price of oil will be much lower next year, so, if you ask me, I’m willing to recommend we stick to the decision not to impose an additional ₱2 in the meantime,” Diokno said.
He said he did not know how long the tax increase would be suspended, but said the economic managers would assess the situation every quarter.
Under the Tax Reform for Acceleration and Inclusion Law, excise taxes on fuel rose by P2.50 a liter for diesel and P7 per liter for gasoline this year and were scheduled to go up by P2 per liter in 2019 and P1.50 a liter in 2020.
Calls for the suspension of the excise tax on fuel grew more insistent when inflation hit a nine-year high in September.
On Wednesday night, the Senate approved on third and final reading the rice tarrification bill certified as urgent by President Rodrigo Duterte, in vote of 14 to 0.
The country’s economic managers believe that the passage of the rice tariffication bill would curb inflation by easing the entry of low-cost grain from abroad.
Under the measure, a 35 percent duty will be imposed on imports coming from Association of Southeast Asian Nations member states and 50 percent for non-ASEAN member states.
Another salient provision of the bill is to establish a “rice enhancement fund” worth P10 billion from proceeds of the proposed rice tariffs. The fund will be used to provide different forms of assistance to local rice farmers such as the development of inbred rice seeds, the development of rice farm equipment, and skills enhancement.
Senator Francis Pangilinan said he hoped these interventions should in the end lead to better incomes for local farmers.
“Otherwise, what is the point of putting all these interventions when our farmers remain poor,” he said.
“And the best determinant of whether or not the interventions are effective is if they are earning more.”
Senate President Pro Tempore Ralph Recto said that the Senate bill on rice tariffication mandates that all duties collected from imported rice be plowed back to farmers through “a raft of assistance in the form of equipment, insurance, credit, and even direct financial aid.”
The Senate position is that government should not profit from rice tariffication, Recto said.
He said some quarters in the government were toying with the idea of using rice tariffication to “shore up the government’s fiscal position.”
“But rice tariffication is not a revenue measure. By stipulating in the bill that 100 percent of duties will be plowed back to farmers, we are sending a strong message to those who might be tempted to use it to primarily raise taxes that their idea is dead in the water,” Recto said.
Recto said there was a proposal from an agency in the government’s economic cluster to limit plowbacks to P10 billion a year “even if duties collected from imported rice are double or triple that amount.”
One proposal, which the Senate rejected, is that the annual funding for the Rice Competitive Enhancement Fund, which shall be sourced by rice duties, shall be capped at P10 billion, and all excess collections will effectively be booked as national income, Recto said.
“That would be unfair,” Recto said in Filipino. “For example, if the collections come to P25 billion, would the government get a bigger share than the farmers who are affected by the imports? Farmers get the pain and the government gets the gain?”
He said government think-tank Philippine Institute for Development Studies projected government revenues from rice tariffs would range from P13.9 billion to P27.7 billion next year.
In last night’s period of amendments on the rice tariffication bill, the Senate agreed on setting the RCEF at a minimum P10 billion a year for six years, and tariff revenues in excess of P10 billion shall be appropriated by Congress based on a menu of programs in the rice tariffication law.
“The result is a 100-percent plowback rate. Everything will be returned to the farmers. They will get all the dividends to compensate for their losses, which I think will never be enough,” he said.
“Duties will be spent to cover their losses, improve their productivity and not to plug the budget deficit,” Recto said.
In the House, a party-list lawmaker urged the public to oppose the continuing implementation of the TRAIN law and the succeeding packages that the administration hopes to pass.
“Notwithstanding the suspension of the excise tax on oil for the first quarter of 2019, the people should be vigilant about the fact that the government remains grim and determined to implement not only the anti-people provisions of Train Law package 1 but also other packages,” Anakpawis Party-list Rep. Ariel Casilao said.
“Ordinary Filipinos, mostly the working class, peasants, urban poor and even the middle section, should step up their protests against the anti-people provisions of the tax reforms of the Duterte administration,” he added.
Also on Wednesday, the Bureau of Fisheries and Aquatic Resources called for an investigation into the high prices of fish in major local markets, including those in Tandang Sora, Muñoz, Balintawak, and Kamuning, where galunggong was selling for P50 over the suggested retail price of P140 per kilo. With Maricel V. Cruz
