Assemblers, importers buck move to raise tax on cars

The automotive industry has submitted a position paper to Congress asking legislators to reconsider the proposal to raise the excise tax on cars.

The Chamber of Automotive Manufacturers of the Philippines (Campi) and the Association of Vehicle Importers and Distributor (AVID)—which largely represent the leading automakers and importers in the country—wanted lower rates compared to those being proposed by the Department of Finance (DOF).

This was the first time that car makers raised their concern as an industry toward the proposed increase in the excise tax, which many fear would slow down the sales momentum of the local market, which is initially targeting 500,000 units in 2020.

“We have submitted to the Congress our position paper as an industry,” Campi vice president Dante C. Santos said in a press briefing Monday night.

Congress is in the middle of talks to increase the automotive excise tax as one of several measures to offset revenue losses from the lowering of the personal income tax under the Tax Reform for Acceleration and Inclusion bill.

Late last year, the DOF submitted the first package of tax reforms to Congress, but this was never filed as a bill. Compared to the DOF’s version last year, the bill would now want to impose a 4-percent excise tax for cars under the first bracket —vehicles valued below P600,000—as opposed to the 5 percent as earlier proposed.

While the DOF said that the adjustment was already a concession in favor of car firms, Santos said the industry wanted to raise the first bracket up to P1 million while keeping the excise tax to more than 2 percent, which is the same rate currently in effect for cars valued below P600,000.

“From the manufacturer’s viewpoint, we want it much less. We are still pushing. Two percent more is quite very big on our side. We will negotiate as much as we can,” Santos said.

When asked if this was different from HB 4774, he said that they would still want to explore lower rates, not only for the first bracket, but also for succeeding segments that were targeted to be taxed with higher bills.