As lawmakers approve a proposed tax package that includes removing excise tax exemptions on pickups, automakers warn that this could do more harm than good for the economy.
CAMPI President Rommel Gutierrez warns that excise taxes on pickups will result in less revenue for government
The Philippine Daily Inquirer reports the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) as being dismayed over reimposing excise taxes for pickups, which runs counter to the provisions of the Tax Reform for Acceleration and Inclusion (TRAIN) Law enacted during the Duterte administration.
“CAMPI strongly objects to the proposal to remove excise tax exemption of pickup trucks, a major component of the commercial vehicle segment,” said CAMPI President Rommel Gutierrez in a statement issued Friday. He added that new taxes on motor vehicles will cause prices to increase, impacting sales volumes and ultimately resulting in less revenue for the government.
Pickups are currently exempted from excise tax under the TRAIN Law
The country’s largest industry association of vehicle manufacturers revealed that it missed its sales targets for 2021. CAMPI data showed that while automakers sold 268,488 units or 20 percent more compared to 2020’s 223,793 vehicles, the figures are still 27.42 percent lower than pre-pandemic sales of 369,941 units.
“From January to March (2022), automotive sales are starting to show signs of recovery. But still on a year-on-year basis, the whole market has grown only by 0.8 percent and that still puts the auto industry at about 78 percent of pre-COVID levels,” explained GT Capital Auto and Mobility Holdings Chairman Vince Socco in a CNN Philippines report.
An industry expert says that even if pickups are used privately, they still take the burden off the country's mass transport system
Pickups were exempted from excise taxes under the TRAIN Law in 2017, to incentivize their use by small businesses. However, Finance Secretary Benjamin Diokno said the Department of Trade and Industry (DTI) has observed that pickups have been modified to serve as lifestyle and recreational vehicles, which allegedly circumvents the basis of the exemption.
Socco believes that motor vehicles are easy targets for taxation since they are commonly viewed as luxury items. “What many fail to take into account is that motor vehicles are a driver of economic growth. It’s not just for private use. But even then, when it’s for private use, it takes some of the burden off what is an already seemingly overburdened mass rapid transport system,” he said.
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