Roxas stands pat on tax-exempt status of AUVs

Trade and Industry Secretary Manuel Roxas II said there is no need to make a further distinction between basic Asian utility vehicles (AUVs) and dressed-up or fully-loaded AUVs for tax purposes.

Roxas said that as far as he is concerned, the only distinction should be between AUVs and sports utility vehicles (SUVs).

Accordingly, Roxas said AUVs should remain tax-exempt even though the Department of Finance considers dressed-up or fully-loaded AUVs as a possible loophole for tax evasion.

Roxas acknowledged that dressed-up or fully-loaded AUVs present a grey area since they can effectively masquerade as cheaper versions of SUVs.

However, he noted that even the higher priced, fully-loaded AUVs cost about P800,000 at most compared to the basic SUV which has a starting price of over P1 million.

For tax purposes, Roxas pointed out, most of the problem in terms of tax collection is solved by the differentiation between AUVs and SUVs.

AUVs are currently the most affordable utility vehicle for middle class Filipinos while SUVs are more of the luxurious type with bigger engines.

AUVs are also widely used as service transports.

Likewise, Roxas said, the tax problem is already 80 percent to 90 percent addressed by changing the standard for taxation from the number of seats to sticker price and by clearly differentiating SUVs from AUVs.

The Board of Investments (BOI), which Roxas chairs, had earlier ruled that AUVs should be tax exempt.

It was explained that allowing the continued tax exemption of AUVs would help develop the local automative industry.

Thus, imposing a 15 percent excise tax on AUVs would put undue pressure of the industry.

The Arroyo administration is eyeing a 15 percent excise tax on all motor vehicles in an effort to raise much needed revenues.

The Arroyo administration is expecting to post a budget deficit of P145 billion this year and as of end-August, the cumulative deficit for the eight-month period had reached 99.53 billion.