The Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) is standing its ground on the proposed hike in excise tax on cars, even when adjustments were made in House Bill 5636, with the hope that Senate would decide on a policy closer to what the industry wants.
Campi president Rommel Gutierrez told reporters in a recent interview that the group of car manufacturers would insist on the position paper it filed in both houses of Congress in February, refusing to concede to the policy laid down in the version of the house bill.
In its position paper, Campi sought the expansion of the number of tax brackets indicated in the Tax Code of the Philippines from four to seven, suggesting tax rate hikes that were lower than what the government recommended.
It also asked for at least six months of lead time before the new law is implemented.
The Lower House ended up with a final bill that expanded the number of tax brackets into five, lowered the excise rates than initially proposed, and even provided a phased implementation of the higher charges for two years.
HB 5636, which was passed last month, was the first package in the government’s comprehensive tax reform program, a move which aims to lower personal income tax while expanding the base of VAT amidst new or higher taxes on consumption.
The bill includes provisions that would hike the excise tax rates currently imposed on cars, a move feared by some automobile company officials for its potential to dampen the sales of the fast growing industry.
“We will stick with our original position. They are now discussing this in the Senate. We just hope that the Senate would consider the industry position,” Gutierrez said.
Since the Department of Finance (DOF) unveiled its first version of the first package last year, a number of changes were made into the proposal as it made its rounds in the House of Representatives in a bid to at least reach a middle ground.
Throughout the Congressional sessions since the start of the year, policymakers ended up with a final house bill that expanded the tax brackets of cars covered, lowered the excise rates than initially proposed, and even provided a two year phase for the implementation of higher charges.
In spite of the adjustments, these are still relatively higher than the increases the industry is comfortable with.
However, Gutierrez, who is also the first vice president of Toyota Motor Philippines Corp., admitted that the version approved in the House was “better than the original [proposal of the DOF].”
To recall, the original proposal of DOF wanted to impose higher excise taxes on cars. For example, it wanted a five-percent excise tax for cars valued below P600,000. In the final version of the bill, the same cars would only be charged with a three-percent excise tax in 2018, and four percent from 2019 onwards.