Health advocate, car industry support proposed tax reforms

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THE proposed increases in automobile excise tax under the Comprehensive Tax Reform Program are a highly progressive and pro-commuter measure, a non-government coalition said on Friday.

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Jo-ann Diosana of the Action for Economic Reforms told lawmakers that the tax reform package will help ease the worsening traffic crisis in major urban centers, Department of Finance said in a statement.

AER supports the excise tax reform, but such measure “should not negate the government’s Automotive
Resurgence Strategy Program” which aims to develop the Philippines to a regional manufacturing hub for motor vehicles, Diosana said during a House committee hearing. AER is primarily a health and economic policy group.

“First, the excise tax on automobiles is a highly-progressive tax. We believe that having cars is a luxury, but public transportation is a right,” Diosana said, citing the AER position paper.

Earlier, AER expressed its support for the measure and described it as a potential “game changer” which would not only generate revenues but also enable the government to finally address the country’s infrastructure backlog and invest heavily in human capital formation.

“What better way to finance our mass transit system plans than collecting from those who have more capacity to contribute to building our nation’s transport system?” Diosana said.

People will think twice now before buying a second car due to the measure, despite having an increased take-home pay resulting from the personal income tax cuts under the CTRP, she said.

The Chamber of Automotive Manufacturers of the Philippines and the Association of Vehicle Importers and Distributors (AVID) said in a joint statement that they likewise support HB 4774 to enable the government to raise enough revenues for its programs.

House Bill 4774, filed by Representative Dakila Carlo, seeks to amend certain provision of the National Internal Revenue Code of 1997:

• For vehicles worth P600,000 or below, an increase in excise tax from 2 percent to 4 percent

• For vehicles worth P600,000 but not more than P1.1 million, an excise tax of P24,000 plus 40 percent of value in excess of P600,000

• For vehicles worth over P1.1 million but not more than P2.1 million, an excise tax of P224,000 plus 100 percent of value in excess of P1.1 million

• For vehicles worth over P2.1 million, an excise tax of P1,224,000 plus 200 percent of value in excess of P2.1 million

Tax reform is indispensable to the government’s goal of investing some P1 trillion more each year on top of the current P1.3 trillion it plans to spend on infrastructure, education, health, social protection and other programs necessary to create enough decent-paying jobs for, and improve the living standards of, Filipinos and at the same time make the Philippines more globally competitive and attractive to foreign investments, Finance Secretary Carlos Dominguez 3rd said.

Increasing the tax tiers from four to seven and providing a six-month grace period from the implementation of the new tax rates can mitigate the impact of the excise tax adjustments on the local car industry, AVID chair and president Maria Fe Agudo Perez said.

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