Vetoed items meant to pay back Mitsubishi, Toyota
MANILA, Philippines — Senate Finance panel chair Sherwin Gatchalian raised concerns over three items vetoed by President Ferdinand Marcos Jr. in the 2026 national budget, particularly two programs intended to cover government obligations to international car manufacturers Toyota and Mitsubishi.
Marcos signed the 2026 General Appropriations Act into law after vetoing P92.5 billion worth of unprogrammed appropriations. Among the items struck were the Fiscal Support to the Comprehensive Automotive Resurgence Strategy (CARS), originally allotted P4.321 billion, and the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) program, which had P250 million.
Both programs are designed to support the Philippine automotive industry by allowing the government to grant tax incentives to manufacturers investing in the country.
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Tax incentives, unpaid obligations
At a press briefing on Tuesday, January 6, Gatchalian said Toyota and Mitsubishi were promised tax incentives under the CARS program to encourage investment in the Philippines.
He said those incentives had not been released for the past four to five years, creating the impression that the two carmakers owe taxes to the Bureau of Internal Revenue.
In reality, Gatchalian said, the obligation to BIR should be shouldered by the government as part of the incentives promised to the firms.
"The problem is that Mitsubishi and Toyota’s books still show a debt to the BIR. That needs to be cleared and removed from those books. These unprogrammed funds were supposed to be the solution," Gatchalian said.
Marcos’ veto rationale
In his veto message, Marcos said the CARS and RACE items were among those struck as part of an effort to restore public trust in the budget process following a major corruption scandal at the Department of Public Works and Highways involving alleged multibillion-peso kickbacks.
"The veto of these items is a measured exercise of Executive authority to rebuild public trust in the budget process, by ensuring that public funds are expended in clear service of national interests," Marcos said.
"I direct all concerned departments and agencies of the national government to exercise prudent fiscal management to ensure uninterrupted quality public service," he added.
Gatchalian said one possible workaround for the removal of the CARS and RACE allocations would be to tap the president’s contingent fund or other available funding sources.
Counterpart funds also vetoed
Marcos also vetoed P35.769 billion under the Government of the Philippines counterpart for foreign-assisted projects.
The president said funding for such projects is already lodged under the appropriate government agencies.
Gatchalian said he remains concerned, noting that several foreign-assisted projects are expected to come in later in the year.
He said the administration may again have to rely on the contingent fund if existing line items prove insufficient to cover incoming projects.
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