The Philippines is dependent on foreign sources for oil and many food products. We import huge quantities of food items such as rice, pork and chicken because local output is not sufficient to meet demand.
On the other hand, the purchase of imported food items required by manufacturers and consumers has allowed the government to generate income via the tariffs slapped on these products. Tariffs and other charges imposed on imports form part of the government’s revenue, which funds its operations and programs.
Rice has become one of the most expensive food imports because traders now have to pay a steep tariff rate. Meat products are also expensive, but the landed price will depend on the source because the government now allows the purchase of these items from Southeast Asia at lower tariffs. Those sourced from outside Asean are slapped steeper rates of 35 percent for pork and 40 percent for chicken.
Ideally, the government should be able to collect all the tariffs imposed on imported food items. This is possible if both the importer and the origin of the food items declared the correct dutiable value. Problems arise, however, when the right amount is not declared because of collusion between the trader and the source of goods. Dubbed technical smuggling, this is a practice that allows importers to pay lower duties and taxes for their undervalued imports.
Nongovernment organizations and other groups fighting smuggling claimed that the practice has been going on for many years. Dr. Jesus Lim Arranza said the government loses an estimated P200 billion a year due to smuggling. Despite this, no one has been apprehended or jailed for engaging in technical smuggling. More often than not, what the public sees is the destruction of smuggled goods. We hardly hear about smugglers getting punished for their misdeeds.
Technical smuggling is a serious problem, particularly at this time when funds that should bankroll initiatives aimed at improving the competitiveness of farmers depend on the collection of tariffs from rice imports. If government can’t stop this practice in its fight against smuggling, then it should consider abolishing tariffs on the staple and other food items that the country imports in huge quantities. There’s no point in continuing to impose tariffs on these food items if the government can’t collect the right amount and traders and corrupt officials are the ones becoming richer, at the expense of local producers.
Allowing duty-free imports will make food items cheaper and will altogether eliminate smuggling because there is no reason anymore to resort to such criminal activity. To offset revenues lost from the removal of tariffs, government can raise the cost of securing import permits (sanitary and phytosanitary), and also increase the rate of value-added tax. This will make it less tedious for the Bureau of Customs to monitor shipments, as they will just document incoming and outgoing cargoes.
If our economic managers reject these ideas, they must find ways to vigorously implement the necessary reforms that will eliminate technical smuggling. In this day and age, when data is readily available and technology makes it possible to easily communicate with foreign governments, our officials have no reason why they can’t validate the value of incoming shipments.
The President has taken the first step by firing scores of corrupt government employees, particularly at the Bureau of Customs. It is every Filipino’s duty to help the President in his fight against the scourge of corruption.