THE Federation of Free Farmers (FFF) said the government lost P2.2 billion worth of tariffs due to undervalued rice imports.
In a statement Friday, FFF National Manager Raul Q. Montemayor said a recent analysis of import data from the Bureau of Customs (BoC) indicates that 1.75 million tons of rice amounting to P34 billion were imported between January and August.
FFF said 81% of those imports had declared values that were lower than the BoC’s reference prices and standard rates for shipping and insurance, resulting in P2.2 billion in unpaid tariffs.
“Imports were undervalued by only 17% on the average in 2019. But in just the first eight months of 2020, estimated tariff losses already exceed the calculated under collection for the whole of 2019. About 32% of imports in 2020 were undervalued by 20% or more, compared to only 7% in 2019,” Mr. Montemayor said.
Tariffs are charged on the free-on-board or point of origin prices of imports in addition to freight and insurance costs.
The FFF said declared import costs for 2020 amounted to P18.28 per kilogram, lower than P22.75 per kilogram if BoC and standard rates were implemented.
“Because of the lower cost declarations, importers were able to reduce their tariff payments by 20% on the average,” Mr. Montemayor said.
Mr. Montemayor claimed that around 6% of imports in 2020 did not specify complete data on the quality and grade of rice imports, which made it difficult to check the declared values against BoC reference rates.
“In other cases, the BoC itself did not have reference prices for particular grades of rice coming from certain countries. In 2019, only 5% of imports had missing information,” Mr. Montemayor said.
FFF added that the BoC was unable to improve its classification system for rice imports amid inconsistencies in its handling of shipments.
The FFF said that in 2020, eight different tariff lines were used for rice shipments with content of 5% brokens, which made up 74% of total volumes imported.
“As in 2019, a large volume of rice imports in 2020 continued to be categorized under tariff headings normally applied to broken rice used for animal feed. The BoC has yet to convene a working group to determine the proper tariff codes for different rice grades, despite an agreement to do so during a virtual dialogue with the FFF in early July this year,” Mr. Montemayor said.
Meanwhile, the FFF urged the BoC to better manage the undervaluation of imports and other errors in processing rice imports.
“We appreciate the BoC’s reported efforts to retrieve uncollected tariffs and penalize importers who habitually tried to undervalue their imports in 2019. However, these initiatives will not be meaningful if undervaluation goes on unabated and actually intensifies in the meantime,” Mr. Montemayor said.
“This will also deprive farmers of much-needed funding for support measures that will help them adjust to cheap imports,” he added.
Asked to comment, Vincent Philip C. Maronilla, the BoC assistant commissioner heading the Post Clearance Audit Group and bureau spokesman said the agency is looking into the undervaluation of rice imports.
“The Post Clearance Audit Group has also recommended certain importers of rice to be subjected to post clearance audit covering year 2020,” Mr. Maronilla said in a mobile phone message.
With the passage of Republic Act No. 11203 or the Rice Tariffication Law that permitted the unrestricted entry of rice imports if they pay tariffs, an annual budget of P10 billion was allocated yearly for six years that will be used to increase the competitiveness of rice farmers.
In addition, tariff collections in excess of P10 billion each year can be allocated to other support measures to help farmers adjust to the effects of rice imports. — Revin Mikhael D. Ochave