Implementation of auto excise tax set on May 19

Trade Undersecretary Gregory Domingo said yesterday the government may have to implement the controversial Bureau of Internal Revenue (BIR) regulation on automobile excise taxes if Congress fails to pass a new excise taxation scheme.

"Government may have to withdraw the pending excise tax bill in Congress if the solons still fail to pass the bill by May 19," Domingo said.

Without passage of the new bill, Domingo admitted that the controversial BIR Revenue Regulation 4-2003 may finally have to be implemented after all.

Under the legislation pending in Congress, computation of the excise tax on automobiles will be based on value instead of seating capacity.

The BIR ruling was issued in March, tightening the seat measurement requirement on 10-seater vehicles.

Questions about the excise tax bill pending in Congress surfaced following open opposition from at least one local Asian Utility Vehicle (AUV) manufacturer, Isuzu Philippines, that the shift from engine-based to value-based would adversely affect the operations of existing AUV manufacturers.

Under the engine-based excise tax system, AUVs are basically tax-exempt due to the 10-seater loophole.

Because of the 10-seater loophole, another local motor vehicle manufacturer, Honda Cars Philippines Inc., was able to have its original sports utility vehicle, the C-RV, reclassified into an AUV by making it a 10-seater.

Following criticism about the C-RV reclassification, the BIR decided to issue RR-4-2003 which would require a much larger seat measurement requirement for 10-seater vehicles.

Under RR 4-2003, light commercial vehicles such as commuter vans, utility vehicles, sports utility vehicles and the like, except pick-ups, will be subjected to the excise tax unless they have a seating capacity of 10 or more adults.

The regulation defines "seat" as a rectangular area with seat and feet space of not less than 35 cm. wide and 60 cm. long for each passenger and 50 cm wide and 60 cm. long for the driver or operator.