Camacho bucks higher excise tax on AUVs

The country’s principal taxman and revenue raiser, Finance Secretary Jose Isidro Camacho, is against the proposed higher excise tax on Asian utility vehicles (AUVs).

In a letter to Senate President Franklin Drilon, Camacho reiterated that he supports the lower tax structure contained in Senate Bill 2517, which ways and means committee chairman Sen. Ralph Recto is sponsoring.

The bill seeks to impose the excise tax on motor vehicles based on values or prices instead of seating capacity.

Recto has proposed tax rates of three percent to nine percent on AUV’s and other vehicles costing up to P1 million and 20 percent to 40 percent on those priced at more than P1 million. The tax would be based on the net manufacturer’s price.

On the other hand, Sen. Osmeña III suggested that vehicles costing up to P600,000 be exempt from excise tax and those priced at P600,000 to P1 million be taxed at a rate of 13 percent. For those costing more than P1 million, he recommended rates of 43 percent to 100 percent.

At present, AUVs and vehicles classified as 10-seaters, including Pajeros, Ford Expeditions, Land Cruisers, Nissan Patrols, and Suburbans, are exempt from the excise tax.

Camacho said while Osmeña’s proposal to keep the tax exemption for AUV’s costing up to P600,000 is laudable, the senator’s suggested 13 percent rate for vehicles in the P600,000-P1 million bracket would hit 69 percent of the AUV market.

"A much larger consumer group would therefore be burned with an additional four percent effective tax under Sen. Osmena’s proposal (as against Recto’s recommendation) …..This would not be consistent with the desire to benefit the greater number of consumers," he said.

He said those to be benefited from the continued exemption of AUVs priced at not more than P600,000 make up only 17 percent of the market.

Camacho also opposed higher tax rates on high-end vehicles that Osmeña wants to tax at 43 percent to 100 percent.

He said the high rates could result in lower volume sales, and therefore, lower-than-projected tax take for the government.