THE government is weighing the costs and benefits of additional tariffs on imported products as a revenue-generating measure during the coronavirus crisis, as it reconsiders a proposal that could raise as much as P245 billion.
Trade Undersecretary Ceferino S. Rodolfo said in a mobile phone message on Monday that the government will further study the measure, including the impact on costs for businesses and inflation on consumers, after a meeting with the technical committee on tariff related matters.
Mr. Rodolfo said in an online press conference on May 20 that the government was looking at imposing a five percent additional tariff on all imported products to raise revenues.
He said the proposed tariff, which would be added to existing tariffs, will only be imposed if the Finance department signals that the resources are needed to respond to the effects of the coronavirus disease 2019 (COVID-19).
However, the Finance department, Mr. Rodolfo noted that the measure was not needed at this time.
The P245-billion revenue estimate is based on import levels close to the 2016-2018 average.
Mr. Rodolfo on Wednesday said there are concerns over keeping the country’s commitments under international trade agreements. ASEAN member countries can only apply a tariff rate of up to five percent for goods originating from member countries.
There are also concerns over the impact of such a measure on inflation.
“Lahat ng produkto, lalagyan natin ng 5% tariff. Para hindi lumabas na protectionist. Wala tayong pinipiling produkto na pinoprotektahan. (We will impose 5% tariffs on all products. So it won’t come off as protectionist. We’re not picking a product to protect.) It’s really across-the-board because we need to raise money for our COVID-related activities,” he said.
“It’s just 5% para hindi siya maging (so it won’t be) inflationary.”
Mr. Rodolfo on Monday then said that the government will study the inflation impact and that the 5% added tariff, for the moment, has been “abandoned.”
President Rodrigo R. Duterte on May 2 temporarily raised tariffs on imported crude oil and refined petroleum products to raise revenues for COVID-19 relief measures.
The Energy department estimated the government could raise up to P6.78 billion in revenues from the increased import duty this year.
Meanwhile, the results of the Trade department’s preliminary investigations on a possible safeguard duty on automotive imports is set to be released by the end of May.
The Philippine Metalworkers Alliance last year submitted an application for such a measure to the department, saying that there is a link between a surge in automotive imports and injury to the domestic sector, particularly local jobs in making automotive parts.
Mr. Rodolfo said national public interest during the pandemic is also a concern.
“Siguro si (Trade Secretary Ramon M. Lopez) iisipin niya okay, public interest, parang timing ba ngayon na mag-iimpose ang government ng additional safeguard duty, given the environment under the pandemic and possible impact on the industry or hindi?,” he said, adding Mr. Lopez may also consider that duties are more important given the reduced demand for cars.
The World Trade Organization (WTO) in March suspended consideration of Philippine retaliation against Thailand in a 12-year trade dispute, after the WTO’s appellate body was effectively suspended without new judges. Mr. Lopez said the Philippines will continue pursuing the issue as it looks to place tariff or quantitative restrictions on Thailand’s automotive exports to the Philippines. — Jenina P. Ibañez