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January 5, 2018

 

New tax law seen to hike prices of meat in Philippines

 

 

Meat products sold in the Philippines are expected to cost higher upon the implementation of a newly enacted tax reform law.

 

The expected increase would result from hiked fuel prices due to higher excise taxes on petroleum products, according to the Bureau of Animal Industry (BAI), Business Mirror reports. 

 

"Definitely, [higher fuel prices] will add to the cost of our meat products", said BAI Assistant Director Simeon S. Amurao Jr. in an interview with reporters on Thursday, Jan. 4.

 

"Imported meat products will also be affected, as trucking rates may also go up", he added.

 

Amurao explained that the meat traders' concern was not the meat-supply situation but logistics. "This is more of a logistical concern because there is no expected hike in the raw ingredients used by the livestock sector".

 

Under the Tax Reform for Acceleration and Inclusion (TRAIN) Act, diesel, which was not previously taxed, will be imposed PHP2.50 (5 US cents)-per-liter tax in 2018, PHP4.50 (9 cents) in 2019, and PHP6 (12 cents) in 2020.

 

From PHP4.35 (9-cent) per-liter tax, gasoline would be imposed a levy of PHP7 (14 cents) per liter in 2018, PHP9 (18 cents) in 2019 and PHP10 (20 cents) in 2020.

 

Gas tax hike to increase operating costs

 

Jesus C. Cham, president of the Meat Importers and Traders Association (MITA), said the hike in petroleum taxes and the possible increase in electricity rates would increase operating costs for meat importers and traders.

 

He said meat importers would likely pass on the additional costs to customers as "the majority of the meat importers…make very, very little margins".

 

Meanwhile, poultry and hog producers told the Business Mirror that their pricing was influenced by the supply situation in the domestic market.

 

United Broilers Raisers Association President Elias Jose Inciong said that, therefore, there would be no price increases because "broilers are a commodity. Hence, its prices are determined by market conditions and not by cost-plus pricing". 

 

"Broiler raisers are constrained to absorb the additional costs. It cannot be easily passed on to consumers," he elaborated.

 

The president of the Pork Producers Federation of the Philippines Inc., Edwin G. Chen, echoed Inciong, saying price increase depends on the supply and demand of hogs.

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