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Toyota Motor Philippines Corporation Wants SUVs Taxed

TMPC President Nobuharu Tabata urges the Philippine government to plug the loophole that SUVs enjoy with the new taxation scheme. This means vehicles such as the Ford Expedition (top) and the Nissan Serena QR-V (bottom) will be affected.

MANILA - Industry leader Toyota Motor Phils. Corp. (TMPC) has urged government to correct the current tax loophole that exempted sports utility vehicles (SUV) from excise tax payments instead of imposing excise tax on Asian utility vehicles, considered a poor man's vehicle.

In a position paper submitted to the Board of Investments, TMPC president Nobuharu Tabata said the biggest problem with the current tax system is the loophole created by allowing SUVs to enjoy tax exempt status granted to AUVs.

"What the government can do right now is to modify the existing tax structure in line with the promotion of industry development. This they can do by plugging the SUV loophole and adjusting the tax rate for high end-models, Tabata said.

Under the present excise tax structure, SUVs including luxury vehicle Expedition, Pajero, Trooper, Serena, among others are exempted from excise tax because they comply with the 10-seating capacity rule which is used as basis for the exemption granted to AUVs.

Tabata said that instead of subjecting the poor man's AUVs under burgoening taxes the government should "eliminate the SUV loophole."

Latest estimate placed the government revenue loss of P1.5 billion because of the exemption granted to Honda CR-V after it has been reconfigured to accommodate 10 passengers and be classified as an AUV category from an original SUV category.

A complete overhaul of the entire vehicle taxation system is not the answer to the blunder created by passing off SUVs as AUVs which is widely used by small businessmen and the middle-class.

There are four AUV models at present including TMPC's Revo, Mitsubishi Motor Phils. Corp. (MMPC) Adventure, Isuzu Phils. Corporation's Hi-Lander and the reconfigured CR-V of Honda Cars Phils. Inc.

Tabata said that slapping AUVs with excise tax will not get the economy any better, and will not raise the much-needed revenue by the government.

Under the proposed excise tax bill in Congress, AUVs will be slapped with a minimum of three percent to a high of 15 percent.

"AUV is the suitable utility vehicle market development phase of the Philippines. It has developed a wide base of local parts -- high local value added and contributes to employment generation," said Tabata.

He further stated that due to the value added facilities of AUVs, it has a better chance of developing as a long term Philippines export winner.

However, Tabata said, the likelihood of AUVs thriving better on Philippine thoroughfares is threatened by the pending bill in Congress seeking to rationalize excise tax system.

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