Reg’l councils bat for exemption of raw aggie products from nat’l taxes

The private -sector led Regional Agricultural and Fishery Council (RAFC) is pushing for the exemption of all raw agricultural products from any national tax.

The proposal, firmed up in the recent RAFC national summit meeting, urged Agriculture Secretary Luis. P. Lorenzo to work out with the Bureau of Internal Revenue (BIR) the waiver of national taxes on agricultural commodities when they are still in their raw or original form.

The RAFC recommendation broadens earlier proposals by various agricultural subsectors which have been urging the DA and President Arroyo to order the BIR to stop collecting a one-percent withholding tax from farmers.

Previously, the Philippine Maize Federation Inc. (PMFI) said government should exclude corn farmers from complying with BIR Revenue Regulation (RR) 17-2003 which pegs a one-percent withholding tax on corn farmers’ produce.

PMFI executive director Reynaldo M. Cabanao said the tax is an unnecessary burden and only aggravates the plight of mostly poor corn farmers in major corn-producing areas such as the Cagayan Valley in Luzon, Bukidnon and South Cotabato in Mindanao and Cebu in the Visayas.

"RR-17-2003 presumes substantial income from the farmer which is prejudicial, unfair, unjust and immoral as the corn industry is reeling from the effects of agricultural trade liberalization, El Niño, La Niña, super typhoons, floods and other natural disasters, lack of postharvest facilities, lack of affordable production loans, pests and diseases and other factors hindering income in the corn industry.

PMFI said that on top of these, farmgate prices of local corn dip below the critical level of P6.50 per kilo during peak harvest season as a result of the unabated importation of corn substitutes at low tariff.

Farmers also have to contend with soaring production costs as fertilizer, labor and other inputs have become expensive.

The industry in seeking exemption from the one percent withholding tax, cited a Supreme Court directive, GR 198524 in 1994, which confined the imposition of the tax on processed agricultural food products.

"Corn in its original form as grains should be excluded from the RR 17-2003 by virtue of SC directive because corn is a non-food product used mainly as ingredient for the production of feed products in the case of yellow corn grains and as raw material for corn grits and corn starch in the case of white corn grains," said PMFI in its resolution.

The tax, said PMFI is being imposed when the DA failed to deliver the proper budget support mandated under the Agricultural and Fisheries Modernization Act (AFMA) as well as under the Agricultural Competitiveness Enhancement Fund (ACEF) of the Tariffication Act to raise the productivity and competitiveness of the corn industry.

The PMFI took its cue from the local seaweed industry which earlier sought an exemption from the same tax imposed on seaweed farmers.

The Seaweed Industry Association of the Philippines (SIAP) met with BIR Commissioner Guillermo L. Parayno to press for an exemption from the one-percent withholding tax.

Currently, the law mandates seaweed processors to collect the taxes from the seaweed processors by discounting this on the farmgate prices of raw seaweed. As a result, seaweed farmers do not get the full market price for their product.

Previously, SIAP said seaweed farmers are bearing the brunt of having to comply with the issuance this year by BIR of RR 17-2003 which imposes a one-percent withholding tax on raw seaweed.

"It is our contention that seaweed is outside the coverage of RR 17-2003, particulalry paragraph S., Section 2, because such variety as Eucheuma Cottonii and Espinosum, which are commercially culture, are scientifically classified as non-food marine product," said SIAP president Benson Dakay.

Dakay said seaweed farmers should be accorded the same treatment as copra suppliers whose product was declared by the BIR as non-food and was exempted from RR 17-2003.

Dakay added that the Bureau of Fisheries and Aquatic Resources already cancelled its collection fees on seaweed because it was deemed as anti-poor since it reduces the income of seaweed farmers.

Seaweed farming is an aquaculture livelihood of marginal fishermen, mostly from Tawi-Tawi, Sulu and Muslim Mindanao, providing livelihood to about 100,000 families. There are about 10,000 to 15,000 hectares of seaweed farms thriving in the shallow coastal waters located in various parts of the country where seaweed farmers are dependent on seaweed processors who purchase their farm products.

These commercially-cultured seaweed, known as Eucheuma Cottonii and Spinosum, are the sources of carrageenan extract and both are classified as non-food marine products. These are sold to carrageenan processors as dried and non-edible seaweed and subsequently, are processed into food grade semi and refined carrageenan as ingredients of processed food.

Currently, the Philippines is the world’s number one supplier of dried seaweed and natural grade carrageenan and is the third biggest producer of fresh seaweeds, next to China and Japan.

In contrast, the local corn industry is languishing from continued government neglect, said PMFI.