Vehicle parts makers deplore issuance by BIR of RR 4-2003

The Motor Vehicle Parts Manufacturers Association of the Philippines, Inc. (MVPMAP) described the issuance of Revenue Regulation 4-2003 as "untimely" and "disparaging".

According to Rafael Villareal, MVPMAP executive director, "Bureau of Internal Revenue (BIR) RR 4-2003 is seen as an adverse measure, entirely disparaging and the issuance is very untimely."

Villareal explained that the issuance of the RR is untimely because it was issued at a time when the market is beginning to recover after a series of economic problems.

The issuance of the RR, coupled with other price hikes, Villareal warned, would only weaken the economy anew.

Villareal also questioned why this was issued at a time when House bill No. 5466 is still under deliberation.

The House bill will rationalize the automotive excise tax scheme by shifting it from engine base to value-base.

It is expected to energize the automotive industry with high volume and sales.

The issuance of the RR, Villareal said, appears to be pre-empting the proposed law and "thus it may be disparaging."

The RR is expected to take effect on Feb. 16 this year which would increase the selling price of locally made vehicles, including the currently tax-exempt Asian utility vehicles, by 35 percent to 50 percent.

AUVs’ Villareal pointed, comprise 40 percent of the automotive market.

Based on the MVPMAP computation, an automobile currently priced at P700,000 would increase to P940,000 with the effectivity of the RR.

The price increase, Villareal said, would be more moderate if the proposed House bill is passed since the increase from P700,000 would only be about 0.4 percent to P745,000.

The twin move of the BIR and the House deliberations, Villareal said, would only convince local automotive manufacturers to halt production temporarily and wait for the law to be passed.

The passage of the House bill could take as long as six months, thus, resulting in a production vacuum.

If there is such a production vacuum, Villareal warned, local auto parts production would be decimated, resulting in labor layoffs.

The MVPMAP has 256 member firms which employ a total of 27,000 people.

The MVPMAP members are appealing to President Arroyo to intervene and resolve the issue.