ECCP raises concerns over tax reform package

July 18, 2017 at 09:48

ECCP raises concerns over tax reform package

MANILA, Philippines –  European businessmen have joined the growing ranks within the private sector against the proposed higher taxes on sugar-sweetened beverages (SSB) and automobiles in the country, saying both provisions which are part of the first package of the tax reform plan will affect investors and consumers alike.

European Chamber of Commerce of the Philippines (ECCP) president Guenter Taus told The STAR

the planned imposition of tax on SSBs may not necessarily achieve its targets of eradicating obesity and increasing government revenue collection.

On the contrary, Taus said such a move would raise the prices of several consumer goods and hinder economic growth.

“The proposed measure is anticipated to increase the prices of various commodities, and will significantly affect the poorest segments, who are some of the biggest consumers of these products,” he said.

A P10 per liter excise tax of volume capacity is planned to be imposed on SSBs under the first package of the tax reform program.

The move has received strong opposition from food and beverage manufacturers, saying the SSB excise tax is “disproportionately high” compared to those in other countries with similar taxes and will also significantly impact consumers in the lower income bracket.

Meanwhile, Taus said the higher excise tax on automobiles would cause the European automobile manufacturers “to be even more disadvantaged.”

At present, European vehicles incur 30 percent customs duty, 12 percent value added tax, and excise or ad valorem tax from two percent to 60 percent, which translates to 102 percent of the initial retail price.

“Meanwhile, most competing automotive companies in the market originate from jurisdictions with bilateral or multilateral trade agreements with the Philippines, such as Japan and South Korea, for instance, which provide for preferential tariffs on automotive vehicles,” the ECCP head said.

Automotive groups in the country are continuously pushing for lower excise tax rates and wider price brackets in the Senate as the industry remains dissatisfied with the approved version in the House of Representatives.

Under the structure in the original House Bill 4774, the brackets are divided into four – vehicles priced up to P600,000, over P600,000 to P1.1 million, over P1.1 million to P2.1 million, and those over P2.1 million.

The approved version in the House of Representatives last May, meanwhile, known as House Bill 5636 or the Tax Reform for Acceleration and Inclusion bill, expanded the brackets into five and lowered the rates from the original House Bill 4774.

Automotive groups are proposing the following increases: three percent vehicles priced up to P600,000, P18,000 plus 30 percent in excess of P600,000 for those priced over P600,000 to P1.1 million, P168,000 plus 40 percent in excess of P1.1 million for those priced over P1.1 million to P1.6 million, P368,000 plus 50 percent in excess of P1.6 million for those priced over P1.6 million to P2.1 million, P618,000 plus 80 percent in excess of P2.1 million for those priced over P2.1 million to P2.6 million, P1.018 million plus 80 percent in excess of P2.6 million for those priced over P2.6 million to P3.1 million, and P1.4 million plus 90 percent in excess of P3.1 million for automobiles priced above P3.1 million.

A reform of the country’s tax system is being undertaken by the Duterte administration to help fund big-ticket infrastructure projects.

Source: http://www.philstar.com/business/2017/07/17/1720167/eccp-raises-concerns-over-tax-reform-package

 




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