Olongapo SubicBay BatangGapo Newscenter

Thursday, April 14, 2005

Palace imposes surcharge on imported used vehicles

PRESIDENT Arroyo has signed an executive order imposing a P500,000 surcharge on used vehicles. The order was signed shortly before Congress resumed its regular session.

Elizabeth Lee, president of the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi), told reporters Wednesday that the new order would provide more protection to local auto assemblers.

Customs Commissioner Alberto Lina said the President made the announcement during a Philippine Economic Zone Authority event recently.

Both Lee and Lina, however, declined to elaborate on the provisions of the signed order.

The original Board of Investments proposal showed that the P500,000 surcharge should be paid for each used vehicle brought into the Philippines.

The surcharge would be on top of existing taxes, such as the 30 percent most favored nation (MFN) rate, the excise tax (2 percent to 60 percent depending on the sticker price), and the 10-percent value-added tax imposed on the landed cost.

The board cited other countries that have imposed similar measures against the entry of used vehicles.

In Australia, for example, a surcharge of A$12,000 ($9,342) is levied on all imported used vehicles for environmental reasons.

The Japanese government likewise requires buyers to pay a certain amount that would be used for the disposition of the vehicle once it reaches the end of its useful life.

Should the buyer, however, manage to dispose of it on his own, the amount would be returned.

In pushing for a similar measure, the BOI said imported used cars post serious environmental repercussions since they would end up as scrap in the near future.

The agency said there are no provisions under the law that would require importers of these used cars to manage the disposal of these products after their lifespan.

Besides environmental concerns, imported used vehicles dampen sales of local assemblers.

An earlier study made by the Japan International Cooperation Agency (JICA) showed that local assemblers lost 20,000 units in potential sales due to the surge in used imports.

Registration of new vehicles vis-à-vis that of used cars have been falling, according to data from the Land Transportation Office.

A ban has already been issued on secondhand vehicles under Executive Order 156 but the Court of Appeals nullified the directive, thereby allowing importers to continue their operations.

The Office of the Solicitor General has already filed a motion for reconsideration.


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