Local auto industry bucks value-based tax scheme

The local automotive industry is firmly opposing the value-based tax scheme proposed by the government, calling it "a drastic change and full of loopholes."

In a position paper, the Chamber of Automotive Manufacturers of the Philippines (CAMPI), also wanted the government to clarify the tax-rate indexing mechanism on foreign exchange rate fluctuations.

CAMPI president Vicente Mills Jr. said the industry was open to changes in the tax system, but described government’s present direction as "unstable and full of impermanent revenue regulations."

"It was the industry who asked government that changes on the tax system to be made rather than on unstable and impermanent revenue regulations," Mills said.

The local automobile industry, presently dominated by the Japanese auto firms, prefer the engine size and number of seats as basis for taxation.

The value-based tax system on wholesale price, according to CAMPI would result in higher vehicle prices. The group said the proposed system will not protect the consumer from the multiplier effect of currency fluctuations and devaluations.

"The price or value-based system is very vulnerable to even the slightest change in economic environment especially currency exchange rates which has very low revenue contribution," CAMPI said.