Incentives urged for AFV makers, buyers

MANILA, Philippines -  Sen. Ralph Recto is pushing for the grant of incentives to manufacturers and buyers of alternative fuel vehicles (AFV) in order to speed up the development of the market and reduce the country’s dependence on fossil fuel.

In his sponsorship speech for Senate Bill 2856, Recto said the shift from gas and diesel-fed vehicles to AFVs could be hastened with the grant of fiscal and non-fiscal incentives to the importation and manufacture of electric, hybrid and other vehicles using alternative sources of energy.

Among the alternative sources of energy cited by Recto were hydrogen fuel cell, compressed natural gas or liquefied natural gas and liquefied petroleum gas.

“These types of vehicles are low on pollution but high on price. The irony of it is that green cars are expensive, while conventional cars, if you read the newspaper ads, are easy and affordable,” Recto said.

He explained that the primary reason for the high cost of these vehicles, particularly the hybrid and electric types, is that the technology is still new and so mass production has yet to set off.

He noted that another reason for the high-cost is the tax regime on vehicles in the country, which does not distinguish whether a vehicle uses dirty fuel or not.

Recto argued that the government has been granting fiscal incentives to various sectors such as condominiums, mines and even chicharon (pork rind) makers so why not grant the same to AFVs.

“If government has been generous in policy support to financial engineers who do not create anything of real value then why should it not extend the same assistance to real engineers who produce real things?” Recto said.

“The AFV needs a push from the government. And the pushing will be easier if the vehicle is made lighter if it is unloaded of taxes,” he added.

Based on the bill, the manufacturers or assemblers, the manufacture or assembly of completely knocked-down parts of AFVs, including the conversion of vehicles into electric, hybrid and other alternative fuel vehicles, shall be exempt from the payment of excise taxes and duties for nine years.

For manufacturers or assemblers, Recto said they would be exempt from the payment of the value added tax for the purchase and importation of raw materials, spare parts, components and capital equipment used in the manufacture or assembly of AFVs also for nine years.

For importers, Recto proposed that the importation of completely built units of AFVs be exempt from the payment of excise taxes and duties for nine years.

Incentives would also be granted to owners of AFV, particularly exemption from the payment of the Motor Vehicle User’s Charge upon the registration of their vehicles.

The bill also proposes the grant of non-fiscal incentives namely priority in the registration and issuance of plate numbers and in the franchise applications for public utility vehicles.

Recto said that consumers could be given further incentives to purchase AFVs including an exemption from the number-coding scheme or even free parking spaces in new establishments.

“The technologies behind these AFVs are still works in progress. By extending these incentives, we are giving them time to succeed and branch out, in the hope that a Model T on AFVs would be discovered. Tax incentives are the national equity to this venture,” Recto said.

“With this bill, we hope to bring down the cost of AFVs, to put it within reach so that more of them are used on our roads and highways,” he added.

According to Recto, the grant of incentives could bring down the price of AFVs such as the popular Toyota Prius from P2.25 million to at least P1.6 million.

With a lower cost for AFV, Recto said that this could bring up the sales of these vehicles in the country.

He lamented that as of September last year, only 55 electric vehicles were registered at the Land Transportation Office.

“There are a lot more Ferraris than e-vehicles today,” Recto said.