Government to cut NFA subsidy
Posted on September 9th, 2008 | by Philippine Accounting Jobs |The government is inclined to slash the subsidies given to the National Food Authority (NFA) and instead increase the subsidies given to other sectors.
Finance Undersecretary Jeremias Paul Jr. said the department agreed with Socioeconomic Planning Secretary Ralph Recto to cut the subsidies given to the NFA so the government could expand its cash transfer program.
“It’s a good idea. Let the poor get the subsidy,” he said yesterday on the sidelines of a Senate hearing on the proposed P1.415 trillion budget for 2009.
He said that next year, the NFA will lower its rice importation volume and there will be a shift to “domestic production.”
The government, Paul added, would be better off not intervening in the market. “So we’re inclined to do targeted subsidies,” he said.
As such, he said, the government will increase the subsidies given to other sectors.
“It’s up to them where they want to use the money, whether for rice or other food,” he said.
Earlier, Recto said the government should go slow in giving huge subsidies to NFA. He said it would be more beneficial to increase the subsidies given to other sectors such as the unemployed, the senior citizens and to the educational sector.
The interagency Fiscal Incentives Review Board (FIRB) had approved an increase in the Tax Expenditure Fund (TEF) of the NFA.
The so-called TEF is a subsidy released by the Department of Budget and Management (DBM) to government-owned and controlled-corporations and state-run companies mainly to settle customs duties and other taxes arising from the importation of goods.
The government has programmed a TEF for the grains agency of only P7.5 billion for 2008 but NFA expects its TEF needs to increase to as much as P32 billion or more than four times the programmed amount.
The subsidy enables NFA to continue with its operations and fulfill its mandate of selling rice at a cheaper price than the prevailing market rates. It also helps the grains agency to have more funds for its import requirements.
Providing tax subsidy to the NFA is the more favored mitigating measure instead of reducing the tariffs on rice.
Last year, the NFA incurred a deficit of P2.6 billion due to its mandate to sell rice below market prices.
The government has also allocated P2 billion for power subsidies for roughly P4 million small electricity consumers.
Source: Iris C. Gonzales