Car firms back new excise tax

Automotive manufacturers have asked for a four-month suspension of the new Bureau of Internal (BIR) regulation setting precise measurements on the space allocation per passenger of vehicles exempted from payment of excise tax.

Automotive manufacturers met with BIR Commissioner Guillermo Parayno, Finance Undersecretary Cornelio Gison and Trade Assistant Secretary Elmer Hernandez last Friday to ask for a four-month grace period, arguing that the passage of the pending bill in Congress shifting the excise tax from engine-based to value-based would invalidate the new BIR regulation.

If approved, the bill will result in a shift from an engine-based excise tax to a value-based system that will remove the tax exemption currently enjoyed by Asian utility vehicle manufacturers.

Some local automotive manufacturers are against the shift as the new excise tax system would remove the tax exemption enjoyed by the AUVs who are able to use the 10-seater ruling.

Among those that are in favor of the new excise tax law is Honda Cars Philippines, Inc. (HCPI). In a letter to Sen. Ralph Recto, chairman of the Senate ways and means committee, HCPI president Mitsunari Takano said his company is supporting the shift from the current "lopsided tax structure towards a value-based excise tax system."

"We endorse the imposition of the new excise tax system as this will create a level playing field among automobile manufacturers where each one can operate under fair and honest competition. Further, this will help stimulate the industry towards further growth while ensuring each automoble sold in the Philippines will contribute to the government’s total revenue, Takano stated.

On the other hand, those against the value-based excise tax argue that the new system could be manipulated through transfer-pricing wherein manufacturers could sell their vehicles initially at a low price to a subsidiary or marketing entity which would then re-price the vehicle upward. – Marianne Go