House Committee on Ways and Means Chairman Joey Salceda has thumbed down a recommendation from the International Monetary Fund (IMF) for the government to shift away from luxury taxation of cars, saying this would lead to the taxation of public utility jeepneys (PUJs).

The Albay 2nd district solon says that his committee would rather focus on tax measures that “are progressive and will make the tax system more efficient” in response to the IMF report on selected issues in the Philippines.

Salceda said this will mean that the House tax panel will focus on “avoidable or substitutable consumption” rather than taxing “say, older cars which tend to be jeepneys, or other goods and services that the poor cannot avoid to consume”.

“I can’t justify taxing a low-emission luxury car at a lower rate than a [PUJ]–especially during elevated inflation and the return of face-to-face engagements,” said the economist-congressman.

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

He said the Committee on Ways and Means will “study, but is indisposed to the IMF recommendation to shift away from the luxury-based system of taxing automobiles”, and towards an emissions-based system.

Instead, Salceda says he prefers “an updating of the rates of motor vehicle users taxes, based on gross vehicle weight – since it also accounts for the externality that is road damage and congestion”.

“At the same time, to address environmental concerns without burdening the poor, I insist on significant earmarking towards direct subsidies for purchasing new units of cleaner jeepneys,” he added.

“That was the 18th Congress version of the Motor Vehicle Users Tax, and that is also what we are disposed towards, this time around.”

Salceda however agreed with the IMF that further reforms could be explored in excise tax collections and broadening the value-added tax (VAT) base.

He said that in this regard, “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.”

Source:
courtesy of MANILA BULLETIN

by Ellson Quismorio

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