Automakers take the fight for lower excise taxes to the Senate

Jun 28, 2017 | Same topic: Up-to-date consumer reports
CAMPI and the Association of Vehicle Importers and Distributors (AVID) had said that the proposed automobile excise tax increase under House Bill 4774 is too heavy and would adversely affect both the industry and consumers if implemented.
Local automakers and importers are still pushing for lower excise tax rates and wider price brackets in the Senate, which is set to review House Bill 5636 or the Tax Reform for Acceleration and Inclusion (TRAIN) bill. 
 
>>> View more: House Bill 5636 to raise excise taxes on automobiles
 
The Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI), through its President Rommel Gutierrez, maintained their stand in a position paper sent to both Chambers of Congress last February.
 
“Officially, that remains our position, what we submitted originally. We will stick with our original position paper. We just hope the Senate will consider our industry position,” he said.
 
“(We are seeking for) reasonable rates which is what we stated in our position paper. We will not deviate from that,” he added.
 
Philipine road packed with a lot of cars
 
Local automakers and importers are still pushing for lower excise tax rates and wider price brackets in the Senate

The tax structure in the original HB 4774 divides vehicles into four price brackets – a maximum of P600,000 for the first tier, over P600,000 to P1.1 million for the second tier, over P1.1 million to P2.1 million for the third tier, and those over P2.1 million for the fourth tier.
 
HB 5636, meanwhile, expanded the brackets into five and lowered the rates from HB 4774.
 
CAMPI and the Association of Vehicle Importers and Distributors (AVID) had said that the proposed automobile excise tax increase under House Bill 4774 is too heavy and would adversely affect both the industry and consumers if implemented.

>>> Read our article to further understand the influences of higher excise tax rates on Filipino automotive market
 
In order to cope with the financial burden arising from the excise tax, both groups claim that they would need to pass on the added cost to consumers, resulting in a progressive increase of automobile prices. 
 
This, they said, will translate into economic losses to the industry, related businesses and even to government revenue, as new car sales decline on account of the higher prices. 
 
In lieu of the approved HOR version, CAMPI and AVID are proposing the following brackets: vehicles priced up to P600,000, over P600,000 to P1.1 million, over P1.1 million to P1.6 million, over P1.6 million to P2.1 million, over P2.1 million to P2.6 million, over P2.6 million to P3.1 million, and over P3.1 million.
 
A man checking the cars

HB 5636 expanded the brackets into five and lowered the rates from HB 4774

As for the rates, both groups are proposing the following increases: 3% for vehicles priced up to P600,000; P18,000 plus 30 percent in excess of P600,000 for those priced over P600,000 to P1.1 million; P168,000 plus 40% in excess of P1.1 million for those priced over P1.1 million to P1.6 million; P368,000 plus 50 percent in excess of P1.6 million for those priced over P1.6 million to P2.1 million; P618,000 plus 80% in excess of P2.1 million for those priced over P2.1 million to P2.6 million; P1.018 million plus 80 percent in excess of P2.6 million for those priced over P2.6 million to P3.1 million; and P1.4 million plus 90% in excess of P3.1 million for automobiles priced above P3.1 million.
 
Gutierrez claims that their proposal improves on the current version. “It is of course better than the original one,” he said.
 
>>> Taxi drivers’ group stormed LTFRB to protest Grab, Uber and other TNC operations in the country. Read our article for more information.
 

IMPACT OF EXCISE TAX HIKE ON CAR SALES

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Source: Joseph Paolo Estabillo