Tariff vs. restriction
Published by the Visayan Daily Star
Editor-in-Chief & President
Bureau Chief, Dumaguete
MAJA P. DELY
|CARLOS ANTONIO L. LEONARDIA
The policy advocacy group Foundation for Economic Freedom is urging Congress to immediately pass the Rice Tariffication Act to avoid the prospects of runaway inflation.
The group believes the liberalization of rice trade in the country would bring down inflation by 0.4 percentage point as rice prices fall by P7 per kilo. Doing so would alleviate food inflation that hits the poor the hardest.
“We support the call of the government economic managers to Congress for the immediate passage of the Rice Tariffication Act to address rising inflation,” said FEF. “Rice tariffication is a win-win situation for all.”
Replacing the quantitative restriction for rice with tariffication would enable the government to raise revenues that can be used to directly assist affected rice farmers and to fund programs to raise the productivity of rice farms, FEF said.
It would also alleviate the pressure to raise wages as reduced food prices would increase the disposable incomes of wage earners. Increases in wages at this point “will further stoke inflation and hurt the poor in the long run” the group said.
Tariffication would also curb losses incurred by the National Food Authority in its rice subsidy program and stop a further rise in NFA’s debt that is guaranteed by the national government. Food security is also expected to be strengthened because the private sector can freely import from various sources.
The passage of the bill, which amends Republic Act No. 8178, otherwise known as the Agricultural Tariffication Act of 1996, will pave the way for the replacement of quantitative restrictions (QR) on rice imports with tariff. This will remove unnecessary government intervention in the rice market that was meant to protect local farmers by preventing the influx of cheap rice from abroad.
A well thought out Rice Tariffication Act will provide Filipinos with cheap rice and at the same time help farmers if funds collected from the tariff are earmarked for improvements in rice farming.
After giving the QR system that has been in place for decades ample opportunities to achieve its goals, it may be time to give rice tariffication a chance.*