WHILE it is battling the continued strengthening of the peso, low supply of raw materials and a proposed wage hike, processed seaweed exporters now have to face another hurdle — the government’s re-imposition of the one percent agricultural tax.
“One percent lang na but that’s going to cost us a lot,” said Benson Dakay, president of the Seaweed Industry Association of the Philippines (Siap) and chief executive officer of Cebu-based Shemberg Corp.
Dakay said Siap will be appealing to President Arroyo to cancel the tax that will affect all agricultural suppliers, including those of seaweeds.
“On behalf of the more than one million seaweed farmers and traders, who belong to the marginalized sector of society, we appeal for your wisdom to exempt them from the re-imposition of the one percent withholding tax on agricultural suppliers,” read Siap’s letter to President Arroyo.
Dakay furnished Sun.Star Cebu a copy of the letter.
BIR circular
Dakay, in a phone interview, said the government lifted the one percent tax on agricultural suppliers in 2004.
But the Bureau of Internal Revenue (BIR), in Memorandum Circular 44-2007 dated July 6 and signed by BIR officer-in-charge Lilian Hefti, is imposing the tax again.
The circular states that agricultural suppliers cannot claim exemption from the imposition of withholding tax on their sales to top 10,000 private corporations based on the suspension granted by Revenue Regulation 3-2004.
“Exporters are now at a loss,” Dakay said.
He warned that the tax imposition will not only create a negative impact on the already ailing seaweed export sector but will result in the industry’s “shake out.”
This means that half of the 25 seaweed processors may eventually close shop, which would result in income losses for seaweed farmers and thousands of workers.
“Taxing the seaweed traders is indirectly taxing the seaweed farmers.
Collecting the tax through the main processors is not only killing the industry but is definitely oppressing the poorest of the poor,” Siap said in its letter.
The Bureau of Fisheries and Aquatic Resources revealed that seaweed processors, traders and farmers employ between 100,000 and 120,000 workers.
Earlier, Dakay said about 10,000 to 20,000 factory workers of small and medium enterprises in the seaweed processing industry have lost their jobs as a result of the strengthening of the peso, stiff competition abroad, and environmental occurrences such as global warming.
Closure
He said the continued rise of the peso over the dollar led to the closure of five seaweed processors: Dahon Dagat Inc., King Agro-Marine Products, Geltech Hayco Inc., Philippine Carrageenan and Natum Corp.
“For every P1 lost to foreign exchange, exporters lose P0.87 centavos in revenues,” he said.
Dakay said global warming causes the temperature of the sea to rise, which adversely affects the growth of seaweeds.
He also said most of the country’s seaweed processors have been running with only half of their production capacity since July.
A P125 legislated wage increase would be a “final blow” to the country’s export industry, said Dakay.
“The wage increase will be very bad timing. Hapit na gani mi dili ka ginhawa ani,” he lamented earlier. (We’re barely breathing.)
Dakay said Siap will lobby with the National Government to grant their request and address the decline in seaweed exports this year. (MMM)
