DOF urges Congress to support Duterte order to increase pork imports at lower tariff rates

Robie de Guzman   •   April 21, 2021   •   458

MANILA, Philippines – Department of Finance (DOF) Secretary Carlos Dominguez III has called on lawmakers to support President Rodrigo Duterte’s order to temporarily increase pork importations at lower tariff rates to address pork supply woes in the country amid the COVID-19 pandemic.

In a statement, Dominguez said the recommendation to the President to temporarily reduce pork import tariffs and increase the minimum access volume (MAV) on pork imports was made by him and the administration’s economic development cluster (EDC) “after extensive deliberations and consultations among concerned agencies and the public, with all the tradeoffs considered in the cost-benefit analysis done on this major consumer concern.”

In a letter addressed to Senate President Vicente Sotto III, Dominguez said that as Chairman of the Cabinet’s Economic Development Cluster (EDC), he was taking full responsibility for supporting and recommending to the President to sign Executive Order (EO) No. 128, which temporarily modified the rates of the import duties on fresh, chilled and frozen meat of swine and increased the MAV on such imports.

Dominguez pointed out in his letter that the period of the tariff adjustment under the EO emphasizes that “this is a short-term effort that does not aim to harm the domestic industry” and is actually “complementary to the programs of the Department of Agriculture (DA) in helping the domestic hog industry to recover.”

“I would like to take this opportunity to urge the Senate to support this measure so that some 100 million Filipinos who eat pork, especially the poor, will not be penalized by high food prices. If left unresolved, poverty and malnutrition will increase,” Dominguez said in his letter.

“Elevated pork prices will add another problem to households whose incomes have already been heavily strained by the COVID-19 pandemic. With African Swine Fever (ASF) raging through farms for almost two years, data show that domestic supply will remain inadequate for the needs of consumers,” he added.

Pork prices in the National Capital Region (NCR) have already reached as high as P327 per kilo in March 2021, which is 59 percent higher compared to last year.

In March 2021, meat inflation increased to 20.9 percent and was the top contributor to overall inflation of 1.4 percentage points, even higher than the 1 percent contribution to inflation of rice at the height of the 2018 rice crisis.

Dominguez said that to resolve the ASF crisis gripping the domestic hog industry, the DA has put in place several programs, among them, repopulating the swine population, compensating producers for losses in culled hogs, and investing in long-term solutions to the problems of the swine industry.

He pointed out though that these are medium-term and long-term solutions that will not immediately address the current price pressures affecting pork consumers.

Contrary to misperceptions, the DA does not intend to rely on importation alone to solve supply issues in the long haul, the DOF chief said.

“Even with increased imports, a large part of domestic demand is expected to be covered by domestic production, which the DA will aggressively support with improved implementation of its hog production assistance and repopulation program,” Dominguez said.

P3B revenues collected from pork imports under reduced tariff, increased MAV system

Robie de Guzman   •   November 23, 2021

MANILA, Philippines – The Bureau of Customs (BOC) has posted collections amounting to P3 billion from swine meat imports under a reduced tariff system, the Department of Finance (DOF) said.

In a statement, the DOF said that the BOC reported 197 million kilograms (kg) of pork imports from April 7 to Nov. 12 this year.

However, the bureau estimated that it has foregone some P3.4 billion in revenues as of November due to the decreased tariff scheme.

The reduced tariff system was implemented in the second quarter of this year to boost the supply of pork and stabilize its retail prices in the domestic market.

To recall, President Rodrigo Duterte had issued a series of executive orders (EOs) that took effect starting April 7 to lower pork import tariffs and increase the allowable import volumes of the meat to help stabilize the domestic supply and prices of this food staple for the benefit of Filipino consumers.

Executive Order (EO) No. 128, which lowered pork import tariffs to 5 percent within its minimum access volume (MAV) and 15 percent outside MAV for the first three months, was in effect from April 7 to May 14.

EO 134, which superseded EO 128, set tariffs on pork imports under the MAV to 10 percent for the first three months, and 15 percent in the next nine months.

For imports outside the MAV, the tariffs are 20 percent for the first three months and 25 percent in the succeeding nine months.

The one-year effectivity of EO 134 began on May 15, 2021.

“To compute for the effect of the two EOs, we multiplied the dutiable value of meat by 25 percent—less 5 percent and 15 percent—which were already paid for EO 128, and multiply the dutiable value by 20 percent and 15 percent for EO 134. The result showed a revenue loss of P3.4 billion,” BOC Commissioner Rey Leonardo Guerrero said during a recent meeting with DOF.

Guerrero said the volume of pork imports started spiking in March and continuously grew in April to May, but dropped starting June.

The volume of pork imports in April, the month when the two EOs took effect, grew 500.46 percent, from 4.07 million kg in the same month last year to 24.45 million kg.

“This dramatic increase in pork import volumes continued in May, when a total of 36.5 million kg entered the country, representing a 506-percent hike from the 6.02 million kg imported during the same period in 2020,” the BOC said.

In June, the bureau said that pork imports reached 33.62 million kg, which was 531.39 percent more than the 5.32 million kg brought into the country during the same period last year.

“Pork imports continued its steady drop in July, when volumes totaled 31.18 million kg, which was 370.4 percent more than the 6.63 million kg, recorded in the same month of 2020,” it added.

The agency also noted that in August, pork imports increased 271.59 percent year-on-year, and dropped to 164.55 percent in September and 78.47 percent in October.

The volume of pork imports was 6.41 million kg in August 2020 and 23.82 million kg in August 2021; 9.73 million kg in September 2o20 and 25.73 million kg in September 2021; and 10.85 million kg in October 2020 and 19.36 million kg in October 2021.

From November 1-12, pork imports of 7.47 million kg were lower by 11.64 percent compared to last year’s 8.46 million for the same period.

Suspension of fuel excise tax ‘detrimental’ to PH economic recovery – DOF

Robie de Guzman   •   November 15, 2021

MANILA, Philippines – The proposed suspension of excise taxes amid rising fuel prices will be inequitable and will threaten the country’s recovery and growth prospects, the Department of Finance (DOF) said Monday.

DOF Undersecretary and chief economist Gil Beltran issued the statement following calls by some groups for the suspension of fuel excise taxes after prices of petroleum products spiked for several consecutive weeks.

“The unrealized public spending and investments from the foregone revenues will be detrimental to our economic recovery and long-term growth,” Beltran said.

“A more equitable way to address the impact of higher fuel prices is to provide targeted support to the vulnerable groups, particularly the transportation sector, which the government has already committed to do,” he added.

The DOF estimates that suspending all fuel excise taxes and value-added tax (VAT) on fuel excise will result in foregone revenues amounting to P147.1 billion or around 0.7 percent of the gross domestic product (GDP) in 2022.

If the tax suspension covers only the fuel excise taxes and the VAT on fuel excise under Republic Act (RA) No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the government is estimated to lose P119.5 billion or around 0.5 percent of GDP in the same year, it added.

While consumption will be slightly higher at an estimated incremental of 0.6 to 0.7 percentage point, growth will actually be lower by 0.1 to 0.2 percentage point, if the excise tax and VAT on it are suspended, the department further stated.

Beltran also stressed that higher income households are estimated to benefit from the suspension more than lower income households.

“With the suspension of fuel excise taxes, we will lose the improvements we made under TRAIN in making the tax system more equitable, in which those who are more financially capable pay more taxes,” he said.

The DOF noted that higher income households are estimated to benefit 60 percent more than lower income households from the suspension of fuel excise taxes.

With the tax relief that would accompany the suspension of fuel excise taxes, the disposable income of the top 10 percent of households is estimated to increase by around 0.63 to 0.82 percent on average in 2022, it added.

Meanwhile, the disposable income of the bottom 50 percent of households is estimated to increase by only around 0.34 to 0.45 percent.

Beltran said a more equitable way to address the impact of higher fuel prices is to “provide targeted support to the vulnerable groups, particularly the transportation sector.”

The government earlier said it will release P1 billion fund for cash grants to 178,000 public utility vehicle drivers for the remaining months of the year through the Land Transportation Franchising and Regulatory Board (LTFRB).

Once spent, the cash grants are estimated to result to an incremental P2.9 billion pesos-worth of growth in the economy, the DOF said.

Makati subway project to get tax incentives – DOF

Robie de Guzman   •   November 8, 2021

MANILA, Philippines — The rail operations of the Makati City Subway project will be granted a four-year income tax holiday followed by five years of enhanced deductions and duty exemption on importation for the construction, operation, management, and maintenance of the project, the Department of Finance (DOF) said Monday.

In a statement, the DOF said the Fiscal Incentives Review Board (FIRB) has approved the grant of tax incentives for the P81-billion Makati City subway project, which is expected to begin commercial operations in January 2026.

 The DOF said the board approved the tax incentive grant last month.

“In deciding to approve the project, the FIRB took into consideration the projected increase in economic productivity of P24.4 billion per year once the subway system becomes operational in 2026,” the DOF said.

“This will be monitored, along with the other projected benefits, in accordance with the principle of granting incentives based on merit or performance embodied in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law,” it added.

Finance chief Carlos Dominguez, however, clarified that this package of incentives is confined only to the activity applied for, which is the rail operation.

“The incentives approved will not apply to the other business activities that would be generated from the subway operations, such as the lease of retail areas and advertising, which should be subject to the regular corporate income tax rate and other applicable taxes,” the DOF said.

The subway project is seen to help ease traffic congestion by providing an alternative transport service to up to 700,000 commuters, and reducing the volume of vehicles plying the city streets.

Throughout the deliberations for the project, Dominguez also said that the Makati City government and the Department of Transportation should work out the details of how to connect the proposed subway to the Metro Manila Subway project of the national government, the DOF said.

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