Manila, June 9, 2003 By Jess Diaz, (Star) The Senate has approved on second reading a bill imposing an excise tax on Asian utility vehicles (AUVs) such as the Toyota Revo and sport utility vehicles (SUVs) like the Mitsubishi Pajero, Nissan Patrol and Ford Expedition.

Third and final-reading approval is expected shortly after Congress begins its third and last regular session on July 28. The Senate and the House will then reconcile their respective versions of the measure.

The bill, besides imposing an excise tax on AUVs and SUVs, revises the system of levying the tax on "automobiles" — the generic term used to refer to all vehicles sold in the Philippines that are covered by the excise tax, except jeepneys, buses and trucks.

Instead of seating capacity and engine displacement, the tax will be based on the manufacturer’s net price. Thus, Pajeros, Patrols and Expeditions, which are at present exempt from the excise tax because they are classified as 10-seaters, will be covered by the tax based on their prices.

The Senate-approved rates are two percent for automobiles with a manufacturer’s price of not more than P600,000; P12,000 plus 20 percent in excess of P600,000 for those costing more than P600,000 up to P1 million; P92,000 plus 100 percent in excess of P1 million for those in the P1 million-P2 million bracket, and P1,092,000 plus 150 percent in excess of P2 million for those costing more than P2 million.

The rates are close to those recommended by Sen. Ralph Recto, who chairs the ways and means committee and who is principal author and sponsor of the excise tax bill.

Meanwhile, in a letter to Trade and Industry Secretary Manuel Roxas II, Japan Automobile Manufacturers Association (JAMA) president and vice chairman Takao Suzuki expressed the group’s concerns on the excise tax issue.

Suzuki said JAMA members are concerned that implementation of the tax "will most likely trigger a drastic decrease in sales of AUVs, the true mainstay of automobile production in the Philippines."

Lower sales, Suzuki warned, "will impede growth in the local manufacturing industries and may ultimately lead to loss of employment in auto-related sectors."

While it puts AUVs and SUVs under the coverage of the excise tax, the measure reduces the rates on cars. But it is expected to result in net revenues for the government since AUVs now comprise nearly 60 percent of all vehicles sold here by carmakers.

According to projections made by the Department of Finance and submitted to Recto’s committee, Honda’s CRV (with automatic transmission), which has a manufacturer’s price of P753,440, will have an excise tax of P42,688.

Its retail price would jump from P960,000 to about P1,040,000, including 10 percent value added tax and a dealer’s margin of 16 percent. The manual version would sell for P949,000, or P50,000 more than its present price of P899,000.

The highest-priced Isuzu Crosswind — the XUVi AT — will cost P98,000 more, from its present retail price of P1,012,100 to P1,110,699. But the Isuzu Trooper, which is now selling for P2,134,052, will cost about P400,000 less.

The Trooper is presently levied a 50 percent excise tax because it failed to qualify as a 10-seater. The rate would go down to 18.6 percent under the bill. However, the prices of other Isuzu vehicles would go up since Isuzu Philippines produces only AUVs and the Trooper.

In the case of other carmakers, the new tax system has an offsetting effect on them.

Toyota’s high-end Revo VX200AT, for instance, would cost about P850,000, or P25,000 more, when it is levied an excise tax. But its Corolla 1.6 (manual), presently selling for P790,512, would cost about P90,000 less.

At present, cars are slapped an excise tax of 15 percent. Under the Recto bill, the rate would go down to only 2.6 percent for Civic, which has a manufacturer’s price of P504,892, and 3.7 percent for Corolla, whose manufacturer’s price is P538,716.

Mitsubishi’s Pajero would cost P300,000 more, from P1.5 million to P1.8 million, while the retail price of a Nissan Patrol will jump from P1,950,000 to P2,741,390. — With Marianne Go

Reported by: Sol Jose Vanzi

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