TOKYO—The top Japanese executive of Mitsubishi Motors Corp. said the growth of the Philippine automotive industry may be affected by the government’s plan to impose higher excise taxes on vehicles.
“With taxes higher, it would be hard to grow sales,” MMC chairman, president and chief executive Osamu Masuko told Filipino journalists here.
Masuko expressed hope the Duterte administration would support the Comprehensive Automotive Resurgence Strategy or CARS—the incentive program for the automotive industry initiated by the Aquino administration.
Masuko met Duterte during the latter’s state visit to Japan. Masuko described the Philippine president as a “nice man.”
Masuko said while the proposed restructuring of excise taxes on vehicles remained to be finalized, the higher cost of vehicles could eventually affect sales.
He said it would be good for the Philippine economy to support the automotive industry, citing the experience of Thailand, Malaysia and Indonesia which have bigger automotive markets.
“Growing the auto industry is a key to economic growth,” he said.
Mitsubishi Motors Philippines Corp., the local unit of MMC, enrolled subcompact car Mirage for the CARS program, with an initial goal to produce 50,000 vehicles and later up to 100,000 vehicles a year.
The Finance Department, however, proposed the restructuring of excise taxes on vehicles.
The department proposed excise tax rates of 5 percent to 60 percent on vehicles depending on prices. Under the proposal, automobiles priced below P600,000 would be subjected to a 5-percent excise tax, up from the current 2 percent.
The excise tax rate on vehicles sold between P600,000 and P1.1 million would be 20 percent while the rate on vehicles costing P1.1 million to P2.1 million would be 40 percent. Vehicles costing more than P2.1 million would be taxed 60 percent.
The Chamber of Automotive Manufacturers of the Philippines Inc. warned the proposed tax scheme could prevent the CARS program from taking off.
Two companies have qualified for the CARS program, including MMPC and Toyota Motors Corp. which enrolled the subcompact car Vios.
MMPC said it would start manufacturing Mirage G4 in January 2017 and Mirage in May of the same year. A stamping plant in Sta. Rosa City, Laguna would be completed by January 2018, allowing the company to produce car body panels.
Masuko said it would be important for the Philippine automotive industry to further increase sales, currently representing just a third of those in Thailand and Indonesia, to achieve economy of scale.
“Having more cars will have a big ripple effect on the economy, in terms of jobs,” Masuko said.