HB 4774: Taxing the auto industry to death
OLast part ur argument against raising auto taxes at this time should be better made by the DTI and their now-endangered Comprehensive Automotive Resurgence Strategy (CARS) local manufacturing incentive program. To begin with, DTI has only bagged two — Mitsubishi and Toyota — from a projected three entrants. Which only proves that this CARS program may need some fine-tuning.
The new taxes were never in the cards when DTI got commitments to invest from Mitsubishi and Toyota. The new taxes constitute new conditions and a paradigm shift in the feasibility of building cars locally. Which is totally in character with the previous government, which tended to tear up or modify previously committed-to contracts, just when the proposed FDI was about to be remitted. Not good for our international investment image, which already identifies us as being “unfaithful” to our obligations on a signed contract. A loss of image means more lost employment opportunities and fresh capital. And probably still-born Mitsubishi and Toyota factories. And let us not forget the further retraction of the auto components manufacturing industry, a sector we have long been championing but suffers from being taxed to death and saddled with irrelevant and unusable tax incentives.
As for taxing luxury cars — remember the vanity tax? Like any business or product that is taxed too highly, the move will prod consumers to buy their vanity and luxury product elsewhere, usually somewhere or from someone who doesn’t pay the government any tax. Just like everyone else, greed by government will get them nothing and nowhere.
Case in point: The luxury segment gets hit by excise tax increases up to 72%, opening the floodgates for the return of the gray import market, a market where government was never able to maximize tax revenue. For all the government’s braggadocio about culling smuggling, its record has been very, very poor in Mindanao, considering that cheap fuel imports from oil price-subsidized countries like Indonesia have severely undercut pricing of gasoline from officially taxed sources like local refiners. So what revenue increase can government get if the legitimate luxury car market shuts down and the gray market takes over?
It is wiser to keep Willie Tee Ten of British United Automobiles, Robert Coyiuto, Jr. of PGA, Felix Ang of CATS and Auto Nation Group, and Wellington Soong of Autostrada Motore in business as they pay taxes than bankrupt them while the rest of the luxury imports go through the gray market from which the government gets nada.