Isuzu hopes for lead time before excise tax imposition

MANILA, Philippines — Leading truck manufacturer Isuzu Philippines Corp. (IPC) is hoping that the government will give automakers a lead time if the planned implementation of excise taxes on pickup trucks pushes through.

“We fully support the government in its plans and programs for the betterment of the country,” IPC assistant division head for sales Robert Carlos told reporters.

Carlos said the company wants to have a clear timeline so that it can plan ahead in the event that the proposed removal of excise tax exemption on pickup trucks pushes through.

“With regards to the plan of implementation of excise tax on pickup trucks, we are requesting for consideration and lead-time,” Carlos said.

“We request to review our appeal because pickup trucks are primarily designed for utilitarian purposes, as a business tool designed with an open bed intended to transport cargo. It is actually classified under N1 Category, which refers to vehicles used for the carriage of goods,” he added.

In November, the House of Representatives approved on third and final reading House Bill 4339, formerly known as the Passive Income and Financial Intermediary Taxation Act (PIFITA). The bill is the fourth package of the Comprehensive Tax Reform Package program.

The said bill includes the removal of the excise tax exemption on pickup trucks, which are granted special tax treatment for their utility as workhorses for small business owners and professionals.

PIFITA aims to simplify the fiscal structure for passive income, financial services and transactions, as the reform seeks to cut the number of tax rates for such instruments.

Finance Secretary Benjamin Diokno has said that subjecting pickup trucks to excise tax may bring in an additional revenue of P52.6 billion until 2026.

In September last year, Chamber of Automotive Manufacturers of the Philippines president Rommel Guitierrez said the current tax setup for pickup trucks should be maintained, emphasizing that it is very helpful for small businesses.

“The excise tax exemption is not just about the auto industry. It’s about the multiplier effect of these things – because micro, small and medium enterprises (MSMEs) are using this for their businesses,” Gutierrez said.

He said the auto industry is concerned about the removal of the exemption as the addition of taxes would impact prices.

He said pickup trucks account for around 17 percent of total vehicle sales in the country.

In September last year, Trade Secretary Alfredo Pascual expressed support for the review of the excise tax exemption on double cab pickup trucks.

Pascual said the regular single-cab and chassis pickup, which he described as the real utility workhorse vehicle, has always been exempted from excise tax even before the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

“The TRAIN Law extended the exemption to the double-cab pickup ostensibly to support the cargo mobility requirement of the MSME sector,” Pascual said.

“However, it seems that the imported double cab pickup is often a fully-accessorized passenger unit – a lifestyle vehicle far from the need and reach of MSMEs,” he said.

Pascual said that since the excise tax exemption applies to the whole vehicle, the double cab pickup accessories are also exempted from excise tax.