Tariff cuts only

Albay Congressman Joey Salceda is more popularly known to many of us who have covered Malacanang Palace, specifically during the term of former President Gloria Macapagal-Arroyo (GMA), as one of her “A” students. The “A” stood for the highest grade Mrs. Arroyo rarely gave to her students in the subject of economics which she taught then as Ateneo de Manila University professor.

Salceda remains among the “fair-haired” boys of now Speaker GMA at the 17th Congress. Supported by her former Cabinet officials like Salceda who are also incumbent members of the House of Representatives, Pampanga Congresswoman GMA has been successfully installed as Speaker last month to replace erstwhile Speaker, Davao del Norte Rep. Pantaleon Alvarez.

They all took their oaths as members of the PDP-Laban party of President Duterte in October last year. But by their hearts and minds, Salceda fondly calls themselves as the “boy-lets” of Speaker GMA. Salceda cited none of them asked any juicy House committee as the natural consequence of House leadership changes. Except for ex-Budget Secretary and now Camarines Sur Rep. Rolando Andaya Jr. who was subsequently elected as new House majority leader.

Salceda though remains as vice chairman of the House committee on ways and means, and also as vice chairman of the House committee on appropriations. Himself an economist by profession before he turned to politics, Salceda authored and helped shepherd the passage into law of economic bills of the Duterte administration at the 17th Congress, including the controversial Tax Reform Acceleration and Inclusion (TRAIN) Law.

Salceda described himself as the “focal person” on counter-inflation measures that Speaker GMA officially proposed to the economic team of President Duterte during the Cabinet meeting at Malacañang Palace last Tuesday.

During the next day in our Kapihan sa Manila Bay at Cafe Adriatico in Remedios Circle last Wednesday, Salceda discussed at length these measures.

“These problems cannot be solved by the President alone... Like in a game of basketball, player always needs a supportive girlfriend,” Salceda quipped facetiously. Salceda also doused speculations of supposed grand designs to make Speaker GMA as prime minister through Charter change to shift the country to a federal-parliamentary system. “You’re giving us too much credit that we can swing Charter change,” Salceda countered.

Citing “political economics” at play, Salceda sought to dismiss impressions of a “co-presidency” now of President Duterte with Speaker GMA. This was after President Duterte himself revealed Speaker GMA raised her concern over the handling of inflation problem in the country which is being blamed to TRAIN Law.

Consumer prices rose an average of 5.7 percent in July that exceeded government projection for the fifth straight month and picking up a faster pace for the seventh straight month. Salceda warned the Duterte administration is in the brink of its “first near crisis” unless the inflation problem is addressed squarely.

The Duterte economic managers earlier admitted the inflation factor from the TRAIN law amounted only to about 0.7 percent. Salceda, however, noted with concern the inflation push actually comes from the supply/production side of the Philippine economy. The low agricultural productivity in the country, he rued, was worsened by international factors of rising world crude oil prices and the peso-dollar exchange rate.

Salceda’s keen analysis of the inflation situation got confirmation from yesterday’s quarterly report of the National Economic and Development Authority (NEDA). NEDA director-general Ernesto Pernia announced yesterday the country’s gross domestic product (GDP) slowed down to 6 percent for the second quarter of this year. Noticeably, the agriculture sector posted the slowest growth contributor with measly 0.2 percent from the previous quarter growth of 1.1 percent only.

The NEDA chief concurred with Salceda that inflation “also continues to put pressure on the economy, particularly on the supply side.”

Thus, Salceda explained, Speaker GMA endorsed economic measures that include the temporary removal of tariffs or to bring down to zero rate the agricultural products effective for at least six months only until the Philippine economy adjusts to the structural reforms of the Duterte administration.

 The proposed zero tariff rate will include fish, meat, poultry, rice, corn, vegetables and feed wheat and corn flour products that account for the higher inflation rates the past few months. As recommended, President Duterte can invoke his powers to reduce tariff while Congress is not in session.  This can be done through an Executive Order to be issued when the 17th Congress go on recess starting Aug. 17.

In the middle of our Kapihan sa Manila Bay news forum, Salceda’s mobile phone rang and it turned out Speaker Arroyo was on the other end of the line. We guessed it right as Salceda was reduced to monosyllabic replies: “Yes, Ma’m.” And, “No, Ma’m.” The Speaker was correcting Salceda that she was “not advocating for the importation of meat products at reduced tariff rates.” This after she met with lobby groups from rice traders and other groups opposed to tariff reductions.

But apparently acting on the recommendations of Speaker GMA, NEDA will start to conduct public hearings on the proposed tariff cuts as required by our country’s laws. At the outset, however, the economic advisers of President Duterte are not keen to bring down tariff rates to zero but only to lower it.

Concerned Cabinet officials like Agriculture Secretary Emmanuel Piñol expressed apprehensions on the proposed tariff cuts. “Zero tariff is not a certainty. We’re leaning toward a uniform tariff of 5 percent, except rice which will be at 35 percent,” Department of Budget and Management (DBM) Secretary Benjamin Diokno disclosed.

This is obviously to deflect backlash from domestic producers and Filipino farmers and fisherfolks.

Certainly, however, President Duterte is not one to tarry on tariff cuts to ease food inflation now, not later.