Car firms seek lower excise tax

The local auto industry is asking the government to help local car manufacturers by lowering excise taxes, making permanent investment incentives and buying locally assembled vehicles.

In a press briefing on Thursday, Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) president Elizabeth H. Lee said there is a need to strengthen the completely knocked down (CKD) business because it is where the jobs are.

Lee estimated that the auto industry supports half a million families as it employs 74,000 workers.

She said CAMPI has met with the Board of Investments (BOI) last month to discuss ways to help cushion the industry from the effects of the slowdown in consumer demand.

Lee said one of the measures proposed by CAMPI was to at least lower the excise tax imposed by the government. A two percent excise tax is placed on 600,000 units; 12 percent up to 1.2 million units and 20 percent on the excess.

 “It is pretty hefty. We are asking if this can be shaved,” Lee said.

However, because the government is getting its money for the economic stimulus fund from taxes, Lee said they have also proposed other measures. She said they have asked the BOI to permanently include the industry in the government’s Investments Priorities Plan (IPP).

The IPP, which is changed annually, lists industries that can qualify for tax breaks. No industry is permanently included in the IPP.

For this year, Lee said they are hoping that they will remain in the IPP to encourage capital infusion.

Likewise, Lee said the government must prioritize buying locally assembled vehicles for their re-fleeting program.

“This is similar to President Arroyo’s buy Pinoy, buy local program, which encouarages local government units to prioritize locally made products over imported ones,” she explained.

Aside from this, Lee appealed to the Bangko Sentral ng Pilpinas (BSP) to amend its rule that requires 20 percent down payment for vehicle purchases. Lee explained that whenever car companies offer a zero downpayment scheme, the firm must shoulder the initial cash outlay.

“Reducing the required down payment will help us. At the same time, maybe they (BSP) can also lower the interest rates,” she added.

Despite the call for help from the government, Lee stressed that the local auto industry is not in a crisis. She said the worse case scenario for the industry is a flat growth. Initial industry projection was at two to four percent growth for this year.