Review of tax exemption on pick-up trucks okay with Pascual

TRADE Secretary Alfredo E. Pascual said he is in favor of a review of the excise tax exemption on double-cab pick-up trucks, as it is “a lifestyle vehicle far from the need and reach of MSMEs [micro-, small and medium-sized enterprises].”

“The regular single-cab and chassis pick-up—the real utility workhorse vehicle—has always been exempted from excise tax even before Train [Tax Reform for Acceleration and Inclusion law],” Pascual told reporters.

The Trade chief said the Train Law (Republic Act 10963) extended the exemption to the double-cab pick-up “ostensibly” to support the cargo mobility requirement of MSMEs.

However, Pascual said, “it seems that the imported double-cab pick-up is often a fully-accessorized passenger unit.”

He added that “since the excise tax exemption applies to the whole vehicle, the double-cab pick-up accessories also get exempted from the excise tax.” With this, Pascual said he is in favor of a review of the tax exemption.

Last August 24, the House Committee on Ways and Means endorsed for plenary approval the Passive Income and Financial Intermediary Taxation (Pifita) or Package 4 of the Comprehensive Tax Reform Program (CTRP) and the proposed Fiscal Regime for Mining, which is expected to provide government P63.5 billion in new revenues.

The panel agreed to incorporate in the bill the proposal made by the Department of Finance (DOF), together with the Department of Trade and Industry (DTI), to remove the excise tax exemption of pick-up trucks introduced under RA 10963.

Finance Secretary Benjamin E. Diokno said the proposal shows additional revenue of P52.6 billion from 2022 to 2026.

Albay Rep. Joey Sarte Salceda has questioned the “economic logic” behind the exemption of pick-up trucks from excise taxes on automobiles, noting that the country projects to have lost P38 billion from giving such exemption.

“Why should the state, with taxes as its lifeblood, forego taxes on pickup trucks. What is the societal function? Why should we privilege the 98 percent imported pickup trucks over sedans?” Salceda asked.

The lawmaker issued his statement after local manufacturers announced that imposing the excise tax on pick-up trucks will reduce government revenues as it will “negatively impact its sales volume thereby reducing revenues to the government.”

Salceda cited a letter he received from the DTI indicated that as a result of the tax exemption on pick-up trucks, annual personal-car sales growth fell to 5 percent from 20 percent while sales of pickup trucks rose by 17 percent.

The lawmaker added that the exemption of pick-up trucks from excise taxes should especially have room for debate as it is considered “a line of goods that are imported.”