Value-based excise tax to result in net loss for economy — CRC study

The economy risks losing more in terms of employment and productivity if a value-based excise tax is passed into law, a Center for Research and Communication (CRC) Foundation study warned yesterday.

The value-based excise tax would particularly affect Asian utility vehicles (AUVs) which are widely used as faster and more comfortable alternative to buses and jeepneys by Metro Manila commuters.

AUVs account for over 40 percent of the total motor vehicle market last year.

"The implication is that there is a net welfare loss to the economy when the tax rate on AUVs is put in place," the study said.

AUVs are tax exempt under the existing tax system. However, under the still pending legislative measures which seek to slap excise tax on all motor vehicles based on value, AUVs are going to be slapped with a minimum of three percent to a maximum of 50-percent tax rate.

The three-percent tax rate applies to vehicles valued at P499,000 and below.

Existing AUVs now range from the cheap basic models to the more expensive, upgraded and fully loaded models.

According to the CRC Foundation study, a 10-percent tax on AUV could create an initial net welfare loss of P2 billion. It could also create a possible loss of employment for 1,000 highly skilled workers in the motor vehicle industry alone.

Independent estimates show that if the new vehicle excise tax scheme 15 pushes through, the cheapest price Toyota Revo would cost P193,550 more from P603,000 to P796,000 while the lowest priced Mitsubishi Adventure will increase by P201,250 from P625,000 to P826,250. Isuzu Hi Landers will be slapped the highest tax at 50 percent.