US car firms may elevate excise tax issue to WTO

US car manufacturers said they will to bring their case to the World Trade Organization (WTO) if the Arroyo government decides to adopt an excise tax based on engine size.

The Automotive Trade Policy Council, whose members are Ford Motor Co., General Motors and Daimler Chrysler, had recently written the government, saying they would elevate the matter to the WTO if the Philippine government decides to adopt an excise tax system based on engine size.

Stephen J. Collins, president of the ATPC, had written the government, voicing the US car manufacturers’ concern that adopting an excise tax system based on engine size would favor the local Japanese car manufacturers.

The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) had recently voted in favor of recommending to the Board of Investments (BOI) an excise tax system based on engine size rather than on value. Majority of the CAMPI members are locally-based Japanese car manufacturers.

Lone US car maker, Ford Motor Philippines, Inc., had been the lone dissenting vote.

US car manufacturers are in favor of a value-based excise tax.

An engine-based excise tax would hurt US car manufacturers who manufacture big engine vehicles, unlike the Japanese vehicles which have small engines.

Even before the ATPC letter, top US trade representatives had met with top Philippine officials to lobby against an engine-based excise tax system.

A USTR report had warned that such a tax system could be construed as a form of non-tariff barrier.