Just when government traffic officials are digging deeper for solutions to the traffic mess of the National Capital Region, here goes Congress granting tax perks to private motor vehicles that would further choke the shrinking roads of the capital region.
Lawmakers okayed on Tuesday, February 27, a bill designating the motor vehicle and MV-component manufacturing industry as a priority sector, including it in the strategic investment priority plan (SIPP) of the country.
The SIPP lists sectors qualified for tax perks under the CREATE (Corporate Recovery and Tax Incentives for Enterprises) law or RA 11534.
Under the amended tax provision of the bill, the MV industry and components manufacturing are declared a priority investment sector that will form part of the country’s SIPP in the next 12 years, explained Albay Rep. Joey Salceda, House ways and means committee chair.
Under the bill, registered business enterprises within that industry would be entitled to fiscal incentives under Title XIII of the National Internal Revenue Code subject to certain conditions, the Business Mirror reported.
Opposition
Opposing Salceda’s unnumbered bill are officials from the Bureau of Internal Revenue, the Department of Finance, the Fiscal Incentives Review Board and the National Tax Research Center.
These agencies said that the automatic inclusion of the MV industry in SIPP must conform to the special evaluation process for any sector or industry to be included in SIPP.
An official of the National Tax Research Center said the proposal is inconsistent with the Revenue Code, as amended by CREATE law.
Fiscal Incentives Branch Chief Tax Specialist Roselyn Domo said RA 11534 mandates a thorough evaluation process to determine the suitability and potential of any industry or sector for inclusion in the SIPP.
The CREATE law provides that in no case shall sector or industry be included in SIPP unless it is supported by formal evaluation process or report, Domo stated.
Thus, any recommendation to have the Philippine MV industry in the SIPP to be eligible for it must be accompanied by the said evaluation process or report, he continued.
She said that interested parties must apply for SIPP registration through the Investment Promotion Agencies (IPAs) and the applications will be assisted by the FIRB before being included in the list of SIPP.
Under the CREATE law, SIPP eligibility is valid for three years subject to regular reviews and amendments.
Director Romulo Manlapig of the Department of Trade and Industry’s Comprehensive Automotive Resurgence Strategy program said there is ample time to address the issues raised by the opposition, adding that the incentive provisions under the CARS program are distinct from those under the RA 11534.
The CARS program offers fiscal and non-fiscal incentives to car makers who fulfill the stipulated criteria outlined by the policy.
Carmakers’ support
Rommel Gutierrez, president of the Chamber of Automotive Manufacturers of the Philippines Inc. said he supports the bill as he stressed the importance of government support to keep the local industry competitive. (He is also first vice president for Corporate Affairs Group of Toyota Motors.)
He emphasized the need for continued support to sustain manufacturing and ensure the survival of part suppliers in the country.
“The primary reason for manufacturers who remain in the Philippines, like Toyota, Mitsubishi and Isuzu revolves around the level of government support,” he said.
He said importing vehicles is more expensive than local production but they face challenges in persuading overseas principals to localize vehicle production in the country.
“Our competition extends beyond not only other brands but also those within the region,” he stressed.
He said the exit of Ford, Nissan and Honda was due to increasing lack of competitiveness in Philippine manufacturing, which “reinforces our strong advocacy for local industry support, aiming to sustain manufacturing and the associated network of parts suppliers.”
#WeTakeAStand #OpinYon #Carmaggedon #