NGO bucks plan to expand tax perks for agri inputs

A non-government organization has criticized the government’s plan to continue and expand the grant of tax exemptions to agricultural and fishery inputs.

Tambuyog Development Center (TDC) executive director Arsenio Tanchuling said such plan only benefits major importers-cum-exporters in the aquaculture sector and transnational corporations such as San Miguel Foods and Dole Philippines.

"This tax exemption is a form of subsidy that has benefited rich businessmen but not the fisherfolk sector which is considered one of the poorest in Philippine society," he said.

The Tariff Commission noted that government is required under Republic Act 9281, the law extending the Agriculture and Fishery Modernization Act (AFMA) for 10 years until 2015, to reduce to zero the tariff rates on most agricultural inputs.

Tanchuling said the foregone revenues from the tax exemptions on agricultural inputs would have funded critical intervention projects necessary to boost the competitiveness and productivity of the local agriculture and fishery sector.

Data from the the Department of Finance show that a total of P2.1 billion in foregone revenues resulted from the implementation of Republic Act 8435, the original AFMA law, from 1999-2003.

Tanchuling said the funds could have been spent for basic services or safety nets for poor sectors like the fisherfolk and farmers whose livelihoods are threatened by globalization.

"Instead, the government has chosen to subsidize the rich at the expense of the poor. This is inconsistent with the pro-poor agenda of President Arroyo which she has just emphasized in her inaugural speech," Tanchuling said.

Under the AFMA, government exempts farm machinery inputs from tariff duties. The exemption also applies to feed ingredients.

Aquaculture feeds and feed ingredients were already tax-exempt in the implementation of Republic Act 8435. Fish meal, another aquaculture input, has a tariff rate of one percent but is included in the proposed list of tariff rates to be reduced to zero percent as required by Republic Act 9281.

"Tax exemptions on feeds and other aquaculture inputs have not produced any beneficial trickle-down effect on the coastal communities where the fishponds and fish cages are found. On the contrary, the fish catch of small fishers have fallen because of the environmental costs of unregulated aquaculture," Tanchuling said.