Cabinet approves tariff cuts on oil, iron coils

The Cabinet on Tuesday approved the proposed scrapping of tariffs on oil products and rolled steel coils for galvanized iron sheets. The zero tariff rates on those products, which President Gloria Macapagal-Arroyo is yet to approve, would impact on the country’s trade deals and cost the government up to P4 billion in lost revenues. At a Cabinet meeting in Angeles City in Pampanga, the Cabinet agreed to remove the 3-percent tariff on crude oil and refined oil products and the 7-percent tariff on hot and cold rolled steel coils. The Cabinet also lowered the taxes on mixed alkylbenzene and alkylnapthalene from 3 percent to 1 percent while the duties on polymide-6 were cut from 8 percent to 1 percent. But the Cabinet decided to keep the 40-percent tariff on rice under the Asean Free Trade Agreement and the Asean Trade in Goods Agreement until 2014. The rate would be reduced to 35 percent in 2015, however. For 2010 to 2011, the tariff on sugar would remain at 38 percent, but reduced to 28 percent in 2012, 18 percent in 2013, 10 percent in 2014, and 5 percent in 2015. The Cabinet also agreed to reclassify from sensitive track to normal the transfer of refined coconut oil, with the preferential tariff to be abolished as well. President Arroyo would sign the draft executive orders on the tariff reductions soon, Malacañang said. Finance Secretary Margarito Teves said the new tax rates would result cost the government P3.4 billion to P4 billion a year in forgone revenues. The next administration would have to impose new taxes to offset those losses, he stressed. The next administration would be hard put in bringing back revenue losses without imposing new taxes, according to him. Meanwhile, National Economic and Development Authority (NEDA) acting director general Augusto Santos said the new administration could increase economic activity to recover revenue losses. “We are promoting economic competition; and then, second it is following the rule of law because the Oil Deregulation Law says there should be a uniform tariff for refined products as well as for raw materials," he said. Earlier in the day, Trade Secretary Jesli Lapus said his department is asking the NEDA board to scrap the tariffs on oil and rolled coil steel to "help stabilize prices and lower inflation," adding that revenue lost by the government is revenue gained by the public. President Arroyo chairs the NEDA board, while Lapus chairs the Cabinet committee on tariffs and trade-related matters. —VS, GMANews.TV