Subic car importers get TRO vs P500,000 tax on used car imports

Subic importers have scored another victory against government measures to stop the importation of used motor vehicles.

This time around, Subic importers have been able to secure a Temporary Restraining Order (TRO) against the implementation of Executive Order 418 which imposes a P500,000 specific tax on used car imports.

Olongapo Regional Trial Court Branch 74 issued the TRO Aug. 23, thus temporarily stopping the District Collector of Customs of the Port of Subic from collecting the additional specific duty on used motor vehicles imported into the country.

Malacañang had issued EO 418 to stop the entry into the local market of second-hand used vehicles which pose both an environmental and safety hazard.

The Arroyo administration imposed the specific tax on used car imports as it has, so far, been unable to stop the importation of second hand vehicles through the freeports which continue to question the legality of a government imposed ban on such vehicle importations.

Imported second-hand vehicles are supposedly environmentally hazardous because in their country of origin they are normally at the end of their life span and their assemblers no longer produce replacement parts.

Such vehicles are exported as scrap and end up in the Philippines. The P500,000 specific would be on top of the 30 percent most favored nation (MFN) rate, excise tax ranging from two percent to 60 percent depending on the price, and the 10-percent value-added tax imposed on the landed cost.

Most of the second-hand vehicles being imported are right-hand drive vehicles which are then converted to left-hand drive.

Unfortunately, the conversion poses a safety hazard to both the driver and the public in general since the vehicles no longer comply with vehicle safety standards.

The provision banning the importation of used cars under Executive Order 156, or the Motor Vehicle Development Program (MVDP), is still covered by a court injunction.

The local auto industry has been complaining that used cars stunt the growth of the industry.

Auto makers said more than half of the vehicles registered with the Land Transportation Office last year were imported used cars.