DTI rejects counterproposal to auto excise tax hike

Trade and Industry Secretary Ramon M. Lopez said he would not support the call of the car industry to further water down the proposed hike on auto excise tax, noting enough compromise has already been made.

In a roundtable discussion with the Inquirer on Tuesday night, Lopez said there was only a small difference in the rates being asked for by the industry and those indicated in the first package of the comprehensive tax reform program (CTRP) of the Duterte administration.

To recall, the government wanted to increase the automotive excise tax as one of several measures to offset revenue losses from the lowering of personal income tax under the Tax Reform for Acceleration and Inclusion bill or House Bill No. 4774.

The car industry opposed this, saying the local market “will not be able to bear the resulting burden,” specifically on consumers. It presented a counterproposal last month that suggested an increase, but at lower rates.

The bill, for example, wanted to impose a higher 4 percent excise tax on cars priced up to P600,000. The industry suggested 3 percent from 2 percent in the current law.

Lopez, however, said there was not much of a difference in the suggestions so as to derail the ultimate goal of the tax increase. He said the one percentage point difference was “minimal.”

The industry also wanted to expand the price brackets indicated in HB 4774 from four to seven, a proposed adjustment which he called “immaterial.” The brackets allow for a tax ceiling, depending on the car’s category.

The car industry also asked for a six-month lead time before the implementation of the new tax rates. The industry also sought to exclude from the coverage of the bill the alternative fuel, electric and hybrid vehicles.

Lopez opposed the earlier version of the first package of the tax reform program, which was submitted by the Department of Finance (DOF) to Congress last year. Lopez had said the proposed rates in the earlier version would affect the output under the government’s Comprehensive Automotive Resurgence Strategy (CARS) Program, which was specifically introduced to revitalize local car manufacturing.

Since adjustments found their way to the current bill, Lopez said the DTI was now “in sync” with the DOF.