Tax hike on cars to dampen sales, manufacturers say

MANILA — Car manufacturers expect sales of automotive vehicles to dampen upon implementation of the proposed hike of excise tax on automobiles.

Mitsubishi Motors Philippines Corp. (MMPC) First Vice President Dante Santos told reporters that as additional taxes will be passed on to the buying public, the demand for automotive vehicles will be affected.

“Upon implementation, it will come out, and everybody will have to recalibrate — the inventory, ordering, even the banks will have to recalibrate everything. So all of this recalibration will create the natural slowing down of the speed of buying,” Santos said.

“Any change in structure of pricing affects the demand. Even market acceptance will actually refocus. Acceptability of the pricing will have to be look into. It takes time to adjust,” he added.

Isuzu Philippines Corp. (IPC) Senior Vice President Arthur Balmadrid recalled that when the excise tax on Asian utility vehicles (AUV) was introduced, its sales went down by 20 percent.

“The [increase] in excise tax will have big impact but it will be temporary,” Balmadrid said in Filipino.

Despite the temporary impact on sales volume, he noted that the demand for automobiles will continue with the country’s economic growth.

“Whether we like it or not, when we have economic expansion, the need for additional transportation is increasing,” he added.

“For our part, we have to supply the demand of the market. As long as there is demand, it is our duty to supply. Because we always have to be in the premise, that you have to mobilize the masses in order to go for economic improvement,” MMPC’s Santos said.

As included in its tax reform package, the Department of Finance eyes to increase excise tax of automobiles priced at PHP600,000 and above to 5.0 percent from the current rate of 2.0 percent while imposing tax rate of 20 percent for cars selling above PHP600,000 to PHP1.1 million, 40 percent for those selling over PHP1.1 million to PHP2.1 million, and 60 percent for cars with prices over PHP2.1 million.

Buses, trucks, cargo vans, jeepneys, jeepney substitutes, single cab chassis, and special purpose vehicles are exempted from the proposed tax hike.