Carmakers bank on Senate to consider industry stance on tax reform

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The Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) is banking on the Senate to consider the position of carmakers regarding the tax reform plan, an official said.

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“We submitted our position also to the Senate, which was the same with the House. In fact, we had a simultaneous submission . . . and we will stick to that,” Campi President Rommel Gutierrez told reporters on Friday.

“We just hope that Senate will consider the industry position,” Gutierrez noted.

Higher excise taxes on car sales are part of the tax reform plan the government intends to pursue, in order to offset revenue losses from lowering the personal income tax rates.

In May, the House of Representatives approved on final reading the administration’s tax reform package which seeks to lower personal income tax, while at the same time raising the excise tax on oil and vehicles, expanding the value-added tax (VAT) base, and imposing tax on sweetened beverage and lotto winnings.

Under the auto excise tax segment, the bill seeks to put an ad valorem tax on automobiles based on the manufacturer’s or importer’s selling price, net of the excise tax and value-added tax.

The auto excise tax will be spread in two phases in the next two years.

Starting 2018, the excise tax on automobiles will be raised to 3 percent from 2 percent if the net manufacturer’s price and importer’s selling price is up to P600,000.

Campi and the Association of Vehicle Importers and Distributors (AVID) want the government to lower the excise tax rates on automobiles as well as expand the different price brackets on which the new rates would be implemented.

In a position paper submitted to Congress, Campi and AVID said the proposed excise taxes on automobiles under House Bill (HB) 4774 were too heavy and would “kill the legitimate dream of the youth to be able to afford to buy a brand new car.”

“The motor vehicle industry will not be able to bear the resulting burden without having to pass on to, or share this with, the consumers and therefore suffer from significant market loss due to the corresponding progressive increases in the prices of automobiles. This may, in turn, restrict inclusive access to transport and mobility,” the groups said.

Campi and AVID further said the slowdown in car sales would translate into economic losses on the industry and related businesses and even eventually on government revenue.

The groups want the government to increase the number of price brackets from four to seven to recognize and consider the increased segmentation in the industry.

Besides lower rates and more brackets, Campi and AVID are also seeking to have a minimum lead time of six months from the date of enactment into law of the tax reform package.

They said this would enable the industry to make the necessary adjustments on the impact of the new law.
The carmakers also want alternative fuel vehicles such as electric and hybrid cars to be exempted from the proposed automobile tax rates.

 

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