Customs warned on surge in car smuggling

MANILA, Philippines - Sen. Sherwin Gatchalian has warned the Bureau of Customs to prevent the possible surge in car smuggling when additional excise taxes are imposed on the sale of luxury vehicles.

Gatchalian, chairman of the Senate committee on economic affairs, said some players in the automobile industry are likely to engage in the underground trading of high-end vehicles to dodge paying exorbitant excise taxes.

“In my view, the incidence of smuggling will also go up when higher excise taxes are imposed on luxury cars. If this happens, it should not be ‘business-as-usual’ for the BOC,” the senators said during the recent hearing of the Senate Committee on Ways and Means on the proposed new excise tax on automobiles.

Importers and distributors of high-end ultra-luxury vehicles told the Senate panel that an estimated 20 percent of cars sold in the market are smuggled by unscrupulous traders through the country’s various ports.

The estimate, Gatchalian said, could grow bigger when car dealers and traders use backdoor channels to bring in their products to elude paying proper duties and taxes.

He said the BOC needs a strong strategy to make sure the increase in the tax on luxury vehicles will not result in unabated smuggling.