Salceda nixes IMF bid to shift vehicle taxation basis

HOUSE Ways and Means Chair Joey Sarte Salceda opposed the proposal of the International Monetary Fund (IMF) for the country to shift its taxation regime for vehicles from being luxury-based to an emissions-based system, saying this is unfair to the poor.

In a statement on Thursday, the representative of the Second District of Albay noted the recommendation of the IMF in its new report will impose an additional tax burden to the poor since it will cover public utility jeepneys (PUJ), which remains one of the country’s main forms of commuting.

“I can’t justify taxing a low-emission luxury car at a lower rate than a public utility jeepney–especially during elevated inflation and the return of face-to-face engagements,” Salceda said.

“I can’t justify that to the Filipino commuter, or to the PUJ driver, who was impoverished by the Covid-19 (novel coronavirus disease) restrictions on travel,” he added.

The lawmaker did agree with the IMF that there is a need to update the taxation scheme for vehicles for the government to generate additional revenue with the use of gross vehicle weight as basis.

He said the new system will account for the contribution of a vehicle to road damage, congestion, and environmental harm.

To mitigate the impact of the scheme to commuters, the lawmaker said the government should also provide “direct subsidies for purchasing new units of cleaner jeepneys.”

Revenue generators

SALCEDA also backed the IMF proposal on the implementation of measures with high revenue gains, but will not stifle economic growth.

Among such measures is the enactment of the Ease of Paying Taxes bill, which is still pending in the Senate, to make it more convenient for low-income earners to settle their taxes.

“Low-income taxes should be coupled with higher tax collection efficiency. The crucial link is easier tax compliance. Even if we lower rates, if compliance is still difficult, taxpayers will not comply faithfully,” the lawmaker said.

Another way to improve government revenue, Salceda said, will be the “broadening the Valued Added Tax base.”

“We are exploring getting rid of the de minimis for VAT and duty-free importation. We suspect that to be one of the bigger sources of technical smuggling,” Salceda said.