Review of Excise Taxation Endorsed; on Motor Vehicles

Article excerpt

The Board of Investments (BOI) is favorably endorsing the review of excise taxation on motor vehicles with the aim of simplifying taxation on this sector, which is known to be a major source of government revenues but whose present tax structure prevented government from capturing more revenues.

Former BOI managing head Vicente Perez, who is now Energy Secretary, said the review would have to determine the proper way of computing the base for the tax imposed on automobiles.

"We have to simplify taxation because every time we create artificial breakpoints there would be lesser and lower excise tax level," Perez said.

For instance, Perez noted there are ways of avoiding excise tax payments like reconfiguring 4 x 4 vehicles to become 4 x 2.

At present, excise taxation on automobiles ranges from 15, 35, 50 and 100 percent depending on engine displacement.

"We are wondering if the excise tax would be based on value," Perez said.

Another issue involved is the continuing exemption of the popular Asian utility vehicles (AUVs) from the excise taxation. There were efforts before to subject AUVs to excise taxation but this was strongly opposed by the BOI and the AUV assemblers since the government has made it a policy to promote AUVs as the country's export niche. …