Lawmaker says car makers evading taxes

A pro-administration congressman accused local car assemblers yesterday of evading taxes on sport utility vehicles (SUVs) by declaring them as 4 x 2 units and then converting them later into 4 x 4s.

Rep. Jesli Lapus (NPC, Tarlac), who chairs the House customs, tariff and related laws subcommittee, said SUVs are imported vehicles and are brought into the country as brand new, completely built-up (CBU) units.

He said local assemblers used to bring the 4 x 4 or all-terrain version of these "toys for the rich and the big boys," but when they discovered that they can cheat on taxes by importing 4 x 2s, they have been opting for the latter.

However, the irregularity here lies in the fact that based on information received by his subcommittee, the 4 x 2s are subsequently converted into 4 x 4s and sold for huge profits at higher prices, he said.

He stressed that such profits escape the tax net since a substantially lower tax rate is paid on SUVs brought in as 4 x 2 units.

The Lapus panel estimates that taxes and duties on 4 x 2s average about P200,000, while those on all-terrain units can go as high as P800,000. The cheapest SUV costs between P1.5 million and P1.7 million.

Thus, the subcommittee concludes that the government could be losing as much as P600,000 in duties and taxes on one SUV alone.

Lapus said considering that there are thousands of SUVs on the road, the government could have already lost billions in taxes.

The subcommittee has asked car assemblers to furnish the committee their SUV importation figures so it can have a clearer picture of the "irregularity" that has been going on, but they have so far failed to do so.

This has prompted Lapus to remind the assemblers that they cannot continue to defy his panel.

According to information received by the panel during its past hearings, 4 x 2 SUVs are actually brought in with 4 x 4 conversion kits. As soon as duties and taxes on them are paid, they are converted into all-terrain vehicles by connecting the rear drive train to the front wheels.

Members of Lapus’ subcommittee are also urging the assemblers to accept the rationalized excise tax rates that the Bureau of Internal Revenue has decided to impose on them.

They cited the case of Honda’s CRV, an SUV that has been classified as a 10-seater Asian utility vehicle that is slapped a lower tax.

CRV’s AUV classification should be reviewed since it cannot seat 10 unless the driver and his passengers are small kids, congressmen said. – Jess Diaz