DOF asked to defer implementation of BIR’s excise tax rule

The House of Representatives is asking the Department of Finance (DOF) to postpone the implementation of the new excise tax scheme for motor vehicles.

In House Resolution 1302 authored by Congressman Julio Ledesma of the 1st district of Negros Occidental, Ledesma urged the DOF to defer the effectivity date of Revenue Regulation (RR) –4-2003 which expands the coverage of the current excise tax system by redefining the seating capacity requirements.

Under RR 4-2003, the new tax structure should take effect tomorrow, Sept. 9.

"Considering that the proposed law is on the final stage of enactment, the legislative process should be allowed to take its due course without the pressures and distraction that could be brought about by the implementation of the RR," explained Ledesma.

The law on the new excise tax or Republic Act 9518 is awaiting the final draft of the implementing rules and regulations and is expected to be completed on Sept. 15.

Last month, the bicameral conference committee approved the reconciled version of House Bill 5719 and Senate Bill 2517 that rationalizes the excise tax system for automobiles by adopting the value-based scheme in lieu of the current tax structure based on engine displacement.

The graduated tax scheme ranges from two to 60 percent from the current ranges of 15, 35, 50 and 100 percent.

Elizabeth Lee, vice-president of the Chamber of Automotive Manufacturers of the Philippines said that while the schedule of the RR and RA 9518 is different, the DOF should correct this.

Lee said the law has a repealing clause which makes it possible to render all previous issuances null and void.

The RR’s implementation was already put at bay thrice to give way to the then penning excise tax law.

Lee said the implementation of the RR will complicate the situation as seating capacity requirements will be stricter and will increase the taxes on a number of model vehicles.

She added that once the RR is effective, prices of affected vehicles will go up and subsequently, further soften the demand.

"We expect a short vacuum. We could either sell our inventories or hold on for a while, but others, like commercial vehicle makers will have to bear losses. In passenger cars, the market might have to wait longer in anticipation of lower taxes offered by the new law. But both ways, we’ll get hit," noted Lee.