A lawmaker is urging car manufacturers to explain the “economic logic” behind the exemption of pick-up trucks from excise taxes on automobiles.
“(Car makers) had four years of tax exemptions on pickup trucks. We project that we have lost at least P38 billion from the pickup truck excise tax exemption, and for what? 98 percent of pickup trucks are imported, according to the DTI [Department of Trade and Industry]. The average Juan dela Cruz does not have a pickup truck,” House Ways and Means Chair Albay Rep. Joey Sarte Salceda said in a statement on Sunday.
Salceda made this pronouncement after local car manufacturers released a statement saying that imposing the excise tax on pick-up trucks will reduce government revenues as it will “negatively impact its sales volume thereby reducing revenues to the government.”
In a letter to Salceda, Finance Secretary Benjamin Diokno also said that “subjecting pickup trucks to excise tax will result in additional revenue of P52.6 billion from 2022 to 2026.”
“So, I really need the economic logic: why should the state, with taxes as its lifeblood, forego taxes on pickup trucks. What is the special societal function? Why should we privilege the 98 percent imported pickup trucks over sedans,” said Salceda.
Citing vehicle statistics, he said pick-up trucks produce at least 15 percent more emissions than sedans, and sedans pay excise tax.
Salceda also cited a DTI letter addressed to him, which indicates that as a result of the pickup truck exemption, annual personal car sales growth fell to 5 percent, from 20 percent, while sales of pickup trucks rose by 17 percent.
“I am still open to arguments. But the arguments have to make sense. It can’t be, ‘oh don’t enact this policy because it will reduce our sales and our profits.’ It is not the job of government to assure businesses of profit.”
The lawmaker added that the exemption of pick-up trucks from excise taxes should especially have room for debate as it is considered “a line of goods that are imported.”
Salceda said his job as Ways and Means chair is to “find revenues, create tax laws that boost gross-value-added, and fund the common good.”
“Why should I exempt, say, pickup trucks, which are imported, when the Vios, the Almera, and the Mirage, some of which are locally made, pay their excise—and are typical family cars? It’s an honest-to-goodness policy question that I am willing to hear answers to from the car sales sector,” he said.
“Here is my commitment: I will heed the President and his team because their proposals make sense. And my committee will work its hardest to fund the President’s programs with fair tax policies.”