DTI mulls restoring import taxes on cement and wheat

CEBU, Philippines - The Department of Trade and Industry plans to restore the tariff on imported cement and wheat after observing that the prices of these products remained high despite the government’s move in reducing import taxes to zero.

DTI Undersecretary for Consumer Welfare Zenaida Maglaya said in a report that DTI’s expectations that cutting the tariff would translate to reduction of prices of the said commodities failed to materialize. The department will review the issue this month.

DTI 7 Director Asteria Caberte however said in an interview that restoring the tariff of imported cement and wheat may still not bring down the cost of these products in the market.

“There are a lot of factors that affect the prices of these products and tariff (import taxes) is only one of them. But I believe tariff is not the main reason (or only component in pricing the product.) One of the main factors to consider is the prices of the fuel used (in processing,)” she told The Freeman.

Caberte said that in region 7, prices of cement and wheat has been stable in the last three months. From P202 per bag three months ago, imported cement has been sold in the market at P307 from March 2010 until to date. The price of wheat has also declined to P770 from P795.

“Removing the tariff may increase the prices,” she said.

President Gloria Arroyo, in response to the country’s obligation in the free trade agreement, first reduced to zero percent the tariff on food wheat, feed wheat, cement and cement clinkers in December 2008 and then extended the order last July 2009. Prior to the removal of the tariff, the government was slapping a three percent duty on milling wheat and cement coming from member countries of the Association of Southeast Asian Nations (ASEAN) and 5 percent from those outside the regional bloc.

Meanwhile, Maglaya said in the report that the DTI knows that millers have other operational costs to consider. However, since wheat makes up 80 percent of their production cost, a significant drop in wheat prices should translate to lower flour prices.