Finance Secretary Benjamin E. Diokno said President Marcos Jr.’s decision to not mention the review of the Rice Tariffication Law (RTL) in his first State of the Nation Address (SONA) proves that this is “not a priority” of his administration.
Marcos, who also serves as the Agriculture secretary, was silent about the review of the RTL during his hour-long speech on Monday, despite saying earlier that he wanted an amendment to the measure to make it more “local farmer-friendly” and to stop the country’s dependence on rice imports.
Speaking to reporters, Diokno said he does not see the need to change a “good law,” adding that the RTL benefits “almost all Filipinos.”
While he acknowledged the adverse impact of the RTL on rice farmers, he said a portion of the revenues collected from rice tariffs are being plowed back to them through the Rice Competitiveness Enhancement Fund (RCEF).
“The mere fact that it was not mentioned in the speech does not mean that it will remain. So siguro revisiting the Rice Tariffication Law is not priority of this government,” Diokno told reporters in a chance interview following the post-SONA economic briefing.
Signed by President Duterte in February 2019, the RTL opened up the Philippine rice market by replacing rice import quantitative quantitative restrictions (QRs) with tariffs. The law also mandated that rice import tariffs in excess of the P10 billion earmarked annually for RCEF could be used to provide financial assistance to palay growers, among other possible options. All rice tariffs in excess of P10 billion must be used solely for financial assistance until 2024 to farmers each tilling 2 hectares or below.
The Duterte administration earlier claimed that the implementation of the RTL reduced rice prices to an average of P39 per kilogram (kg) or a reduction of about P7 per kilo compared to its cost in 2018 when it peaked to around P47 per kilo.However, some rice industry groups have lamented that the RTL led to a drop in farmers’ income as farm-gate prices plunged to as low as P7 per kg in certain provinces.
“I think if you are running the government, you must always think of what’s the greatest good for the greatest number so siguro may effect siya sa some farmers, specifically rice farmers but meron din namang ibinibigay sa kanila doon e,” said Diokno, who previously said he would urge the President to continue implementing RTL.
“It was part of the revenues from the rice tariffication goes back to the farmer so parang win-win din yun e. It’s not actually a loss to the farmers but it is a gain for almost all Filipinos.”
Amid proposals for the government to impose a wealth tax, Diokno said this must be “appropriately designed” as there are a lot of factors that need to be considered regarding the feasibility of its implementation as well as its impact on potential investors in the country.
However, he pointed out that it might be more difficult to collect wealth tax rather than value-added tax.
“So when you are designing a tax system, you have to weigh the administrative cost of collecting the tax so ilan ba ang bilyonaryo sa Pilipinas. Magkano ba makokolekta mo? Makokolekta mo ba talaga yon and how much resources are you gonna spend baka magkaroon lang ng leakage ’yun? Pang-harass mo lang siguro sa mga mayayaman so you have to think of all of these things,” he said.
Asked whether the imposition of wealth tax is something that they can consider, Diokno said: “Dapat lang appropriately designed but I don’t see many countries doing that, and also there is the incentive effect so you are going to turn off many of these people. ‘Yung mga papasok sana dito sa Pilipinas, ‘wag na lang. So may ganoong effect. So you have to weigh all of these factors.”
Sen. Sherwin T. Gatchalian, who will take over the chairmanship of the Senate Ways and Means Committee, recently said he is eyeing to file a bill seeking to impose an additional tax or increase the tax rate of wealthy individuals.
Think tank Ibon Foundation is also pushing for the imposition of wealth tax, saying this could yield substantial revenues for the government to expand its social and economic services while reducing inequality.
A wealth tax on the 50 richest Filipinos alone can raise up to P224 billion in revenues, based on earlier estimates made by IBON Foundation.