The group said the anomalies in the valuation and tariff classification of imports not only deprive the government of significant revenues.

The members of a farmer group called Federation of Free Farmers (FFF) have pressed for the government to investigate the apparent undervaluation of tariff rates on rice imports.

The low tariffs, the group pointed out, have resulted in a revenue loss of at least P1.6 billion as of July 2019.

According to a study conducted by the FFF, the tariff collections could have been higher by P1.6 billion from January to July if not for three possibly anomalous circumstances.

The study reveaked that the declaration of import values was lower than the Bureau of Customs’ (BoC) reference values, the understatement of freight costs, and the erroneous application of tariff rates on rice imports.

Raul Montemayor, FFF national manager, explained that tariffs on rice imports are based on the cost of imports from the point of origin, otherwise known as the “free on board” or FOB price, plus the cost of freight and insurance, to come up with the “cost, insurance and freight” or CIF price.

The CIF price is then multiplied by the tariff rate to come up with the customs duties to be paid by the importer.

“Almost half of the volume of rice imports had declared FOB values which were lower than the BoC’s reference rates by more than 5 percent,” Montemayor said.

“By declaring a lower FOB value, importers will be able to reduce the tariffs they have to pay to BoC.”

He explained that the estimated tariff collections could have increased by P684 million had BoC insisted on collecting tariffs based on their reference rates instead of FOB values declared by importers.

The group said the anomalies in the valuation and tariff classification of imports not only deprive the government of significant revenues, but also adversely affect the interests of rice farmers.

“Rice imports will come out to be abnormally cheaper if importers are able to cheat on the tariffs they pay, and this could lead to a further depression in palay prices,” Montemayor said.

Under the Rice Liberalization Law (RLL) which took effect in March 2019, the private sector was given free rein to import unlimited volumes of rice provided the appropriate tariffs were paid.

Based on data culled from the BoC website, about 2.36 million metric tons of rice were imported from January to July 2019, while tariff collections from March to July amounted to P7.8 billion.

Latest reports indicate that total imports may have already reached 3 million tons as of September 2019, while tariff collections during the RLL implementation period have already breached P10 billion.