BOI studying car excise tax hike proposal

The Philippine Star

MANILA, Philippines - The Board of Investments (BOI) expects the proposal to increase excise taxes on vehicles would have a negative impact on the growth of the country’s booming automotive industry.

However, this does not mean the agency in charge of protecting and promoting local industries will automatically oppose the Department of Finance (DOF) proposal, executive director for industry development services Ma. Corazon Halili-Dichosa said.

“At the onset, you will think it will not be supportive of the growth of the auto industry because it will curtail the demand for it. Naturally that is the impact or effect we see at the onset but it is not proper that we say no (to the proposal) right away. Of course we have look at the other side, which is the objective of the DOF,” Dichosa said.

“It needs to be studied further and we will take into considerations the objectives of the DOF. We have our mandates, but then again, we’re just one executive branch. So we’re trying to balance,” she added.

According to Dichosa, the BOI, an attached agency of the Department of Trade and Industry, has started consulting stakeholders as to the possible impact to the automotive sector of the planned higher excise taxes on motor vehicles.

“So we will see how it will affect them and the demand. We already asked the players to comment, provide inputs on what do you think will be the implications of this proposal. And considering there’s also this CARS program, will it upset what we’re trying to achieve, something like that. Those inputs we will then study,” she said.

Automotive industry leaders earlier said hiking excise taxes on vehicles, which is part of the administration’s tax reform package, would dampen sales as it would result in higher vehicle prices.

“It will always dampen demand. Any change in the structure of pricing affects the demand. Even market acceptance will have to be refocused. Acceptability of the pricing will have to be looked into. It takes time to adjust,” Chamber of Automotive Manufacturers of the Philippines Inc. vice president Dante Santos said.

Dichosa, however, said she believes the slowdown in demand, should it happen, would only be temporary.

“As an economist has said, it will only be temporary because eventually people will save up to buy, especially now that a motor vehicle or a car is a necessity to go from one place to another. It’s not a luxury anymore,” she said.

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