Car manufacturers on Monday expressed concern on higher vehicle taxes, saying they will dampen sales and economic growth.
“The Finance Department has a very strong position (on this). Definitely they will push for tax reform including the increase in excise tax for automobiles,” said the Chamber of Automotive Manufacturer of the Philippines.
Industry representatives recently met with the Finance Department to present the current state of the local automotive industry and the effect of the excise tax on automotive sales and the incentive program for motor vehicles.
Automotive sales in the last few years have been robust due to the growing capability of Filipinos to buy cars and the attractive promotions offered to consumers.
“We told them (DoF) the contribution of the industry to the growth of the economy since the recent trend showed sales going very strong and with the increase in excise tax, demand will go down,” the group said.
The group noted that the pending tax reform bill would also have an effect on downstream industries such as auto parts suppliers.
Most parts suppliers are small and medium-scale companies that will suffer from reduced sales.
“We also have to take care of our suppliers, not just us (our companies),” Campi said.
The group is actually seeking lower tax rates to preserve sales growth and the development of the industry.
Campi is finalizing a study that will support the industry’s fear of slower sales and the detrimental effects to government incentive programs like the Comprehensive Automotive Resurgence Strategy and the Motor Vehicle Development Program.
The study will aim to determine the value of increases of a model or variant and the volume of sales lost if the tax proposal is approved in its original text.
Aside from being saddled by tax hurdles, the industry has started to feel the pinch of an unstable foreign exchange rate, especially on the pricing of vehicles.
The industry is set to impose increases in unit prices by December or January next year.