Government to gain P200M under value-based excise tax

The government may lose P1.34 billion in revenues from passenger cars under the value-based excise tax system, simulations by the Department of Finance (DOF) showed recently.

However, to make up for the revenue loss from passenger cars, the DOF projects a tax take of P1.54 billion from the six-to nine- percent tax to be imposed on the currently tax-exempt Asian utility vehicles (AUVs), resulting in a net revenue of about P200 million.

Industry sources, however, said the additional tax revenue of about P200 million would be at the expense of a zero growth for the AUV industry which is expecting a 50-percent drop in sales once the value-based excise tax system is passed into law.

The passage of the new excise tax system remains uncertain with only three more working days before Congress goes on a recess.

According to University of the Philippines (UP) School of Labor and Industrial Relations Dean Rene Ofreneo, the proposed value-based excise tax would only encourage the importation of passenger cars and could weaken the local assembly and car parts manufacturing industry.

Ofreneo said because of expectations of a value-based excise tax system, several local car assemblers have already started shifting to the importation of completely built-up (CBU) passenger cars which at present only account for 18 percent of total industry sales.

AUVs, on the other hand, account for around 43 percent of total industry sales.