DOF bent on slowing down vehicle sales

By Richmond Mercurio (The Philippine Star) Updated February 8, 2017 – 12:00am http://www.philstar.com/business/2017/02/08/1670000/dof-bent-slowing-down-vehicle-sales MANILA, Philippines – The Department of Finance (DOF) is bent on curtailing the number of vehicles being sold in the country to address the worsening traffic problem. “For cars in general, you want to slow down because the cities are getting clogged. The worst traffic in the Philippines is in Cebu. Manila is terrible and Davao is fast catching up. So how are we going to deal with that? Add more cars?” Finance Secretary Carlos Dominguez said. The DOF is spearheading the government’s move to substantially raise the excise tax in automobiles as part of the current administration’s tax reform agenda. Dominguez said the main objective of the proposed increase in excise tax hike in automobiles is to give the country a relief from the number of cars on the road. “You have a situation where you are adding…cars a year into our road system. How many cars are being taken out? None? So what are you doing? You are jamming the roads with more cars and traffic is getting worse and worse,” Dominguez said. Last year, new vehicles sold in the country reached 452,751 units based on combined sales output from the Chamber of Automotive Manufacturers of the Philippines Inc. and the Association of Vehicle Importers and Distributors. According to Dominguez, cars nowadays have become very cheap, allowing more consumers to afford one. “What is the point of having a car if it does not move? It’s like pouring water into a glass and the water is overflowing so what’s the point,” Dominguez said. The planned excise tax hike, however, has received opposition from the local automotive industry, with some players saying that the proposed rates are high and would surely dampen industry sales and growth once implemented. Under the House bill sponsored by Quirino Rep. Dakila Cua, the tax on automobiles priced up to P600,000 will go up from two percent to four percent, while those selling over P600,000 to P1.1 million would be taxed at P24,000 (up from P12,000) plus 40 percent (up from 20 percent) of the amount in excess of P600,000. Cars priced at over P1.1 million up to P2.1 million, meanwhile, would be taxed at P224,000 (up from P112,000) plus 100 percent (up from 40 percent) of the amount in excess of P1.1 million. Cars costing more than P2.1 million would have a tax of P1.22 million (up from P512,000) plus 200 percent (up from 60 percent) of the amount in excess of P2.1 million. Should the government want to address the country’s traffic problems, automotive players argued that it should instead focus on improving the country’s infrastructure and ban old cars on the road rather than put a toll on the industry’s sales growth. Dominguez said taking out old cars, however, would likely produce anti-poor sentiments, such as “kawawa naman yung may mga second hand cars.” Automotive groups are currently preparing a position paper to voice out their concern regarding the proposes excise tax hike. Dominguez said the DOF “will give a good consideration” any proposals coming from the industry.