Albay Rep. Joey Salceda wants car manufacturers to explain why pickup trucks should be exempt from excise taxes on automobiles amid the industry’s opposition to the Marcos administration’s effort to make pickup truck sales subject to excise taxes.
“You had four years of tax exemptions on pickup trucks. We project that we have lost at least P38 billion from the pickup truck excise tax exemption, and for what? 98 percent of pickup trucks are imported, according to the Department of Trade and Industry. The average Juan dela Cruz does not have a pickup truck,” he said.
Salceda is the House of Representatives tax committee chairperson.
“I’m open to any argument, as debate is the basis of evidence-based policymaking. But I want car manufacturers who oppose this policy to tell me what exactly the basis for an exemption of one line of vehicles is,” he said.
“Pickup trucks emit more carbon dioxide, are more expensive generally than sedans, which are the vehicle of choice for the middle class. According to vehicle statistics, pickup trucks produce at least 15 percent more emissions than sedans. And sedans pay excise. So please, tell me why we should uphold the pickup truck exemption,” Salceda added.
The tax exemption on pick-up trucks has been included in Package 4 of the comprehensive tax reform program, which President Ferdinand Marcos Jr. carried over as a priority from the Duterte administration.
Salceda said he is confounded by the statement of car companies that imposing the excise tax on pickup trucks would reduce government revenues as it “will negatively impact its sales volume thereby reducing revenues to the government.”
“They’re exempt. So, any reduction from zero is zero,” he said.
“Besides, there’s a substitution effect, as was seen after TRAIN. If pickups become more expensive, the consumer will choose what he can afford. A shift from one car segment is a shift to another,” he noted.
In a letter to Salceda, Finance Secretary Benjamin Diokno said that “subjecting pickup trucks to excise tax will result to an estimated additional revenue of P52.6 billion from 2022 to 2026.”
“So, I really need the economic logic: why should the state, with taxes as its lifeblood, forego taxes on pickup trucks? What is the special societal function? Why should we privilege the 98 percent imported pickup trucks over sedans?” Salceda asked.
The DTI letter indicated that because of the pickup truck exemption personal car sales growth diminished from 20 percent annually to 5 percent, while sales of pickup trucks increased by 17 percent
“I am still open to arguments. But the arguments must make sense. It can’t be, ‘oh don’t enact this policy because it will reduce our sales and our profits.’ It is not the job of the government to assure businesses of profit. Especially for a line of goods that are imported anyway.”
“My job, as Ways and Means chair, is to find revenues, create tax laws that boost gross-value-added, and fund the common good,” he stressed.
Salceda said he is committed to supporting the President and his team’s proposal, and that committee would work its hardest to fund the President’s programs with fair tax policies.
“Why should I exempt, say, pickup trucks, which are imported, when the Vios, the Almera, and the Mirage, some of which are locally made, pay their excise – and are typical family cars? It’s an honest-to-goodness policy question that I am willing to hear answers to from the car sales sector,” he said.
“I wouldn’t even say they are carmakers, in the context of pickup trucks. Car sellers, yes. Car makers? Pickups aren’t made here,” the solon added.