The Trade Department is pushing for a higher floor value on vehicles that will be affected by the proposed tax reforms.
Trade Secretary Ramon Lopez said the department proposed to adjust the floor price on vehicles that will face higher taxes to P1 million, compared to the Finance Department’s proposal of P600,000.
He said the adjustment would help promote local production of small cars such as Mirage and Vios, consistent with the Comprehensive Automotive Resurgence Strategy program.
“We want to protect the segment where the Mirage, Vios and other small yet affordable cars belong and this is those with value of P1 million below. That is why we are very keen on making this work with the Finance Department,” he said.
He said the Trade and Finance Departments could cooperate on having one fixed, minimal rate for cars falling under the category of P1 million and below.
Vehicles priced above P1 million will be taxed progressively based on a graduated scheme, he said.
Lopez said the Trade Department wanted to make sure the proposed tax measures on vehicles would not affect the Cars program.
The automotive industry earlier said it was willing to go along the proposed tax increase, even to the point of taxing all vehicle line-up, provided that the taxes were well within acceptable range and rates “so as not to kill the industry.”
The Finance Department’s proposal would extensively affect the price bracket of P600,000 to P1.2 million, which has the biggest range that includes small cars, currently the fast selling models, sedans and entry-level AUVs.
The automotive industry also expressed concern that the proposed tax reforms would affect the commitment of their principals to participate in the development of the Philippine automotive sector.
The automotive sector accounts for 12 percent of the industrial output and 4 percent of the country’s gross domestic product.
The industry expects sales to hit 450,000 units in 2017.