European car firms appeal for ‘more equitable’ excise tax

European vehicle makers appealed yesterday to the Congress to pass a more equitable automotive excise tax system.

Speaking through the European Chamber of Commerce of the Philippines (ECCP), European car makers were unanimous in supporting the version earlier passed by the House of Representatives.

According to the group, the measure passed by the House of Representatives would result in a level playing field that would promote economic growth and investments.

The European car makers in the country include BMW Philippines, Mercedes Benz, Volvo and Audi.

The ECCP is proposing a tax rate of 100 percent for vehicles worth P4 million and above; 40 percent-50 percent for cars between P2 million and P4 million; 20 percent for those worth between P600,000 to P2 million and two percent for those worth up to P600,000 and below.

The ECCP is hopeful that the Congressional Bicameral Committee would put in place an excise tax structure that would be acceptable for present and future foreign investors in the Philippines.

ECCP executive vice president Henry Schumacher said that the Philippine automotive industry needs an excise tax structure that best helps the industry which presently sells only 50 percent of its pre-Asian crisis volumes.

The ECCP warned that the excise tax proposal would curtail the operations of the informal market operators, particularly smugglers and tax evaders.

ECCP president William Bailey said the tax structure that the ECCP is proposing would allow the formal market to grow.

"More growth means more excise taxes collected. On the other hand, how can the government collect taxes when there are no sales through the formal sector," Bailey said.