Used car importers oppose P500,000 specific tax

By Marianne V. Go
The Philippine Star 04/15/2005

Subic Freeport investors engaged in the importation of second-hand vehicles cried foul yesterday and called unfair Malacañang’s issuance of an Executive Order (EO) imposing a P500,000 specific duty on imported second-hand vehicles.

Motor Vehicle Importers Association (MVIA) president Peter Geroue said the imposition of "unjustifiable" high taxes on imported used vehicles provides undue protection to local automotive assemblers.

Geroue added that the new EO is a violation of the Customs Tariff and Code.

Under the Customs and Tariff Code, Geroue argued, higher taxes are imposed on brand new automobiles and not on second hand vehicles.

"This is certainly unfair and biased, favoring car assemblers who pay lower taxes than us," Geroue said.

Geroue pointed out that it is "improbable and irrational" for the government to impose much higher taxes on used vehicles, while accepting low tax assessment for brand new vehicles.

The group is questioning the validity of the EO citing the adverse effects to the automotive rebuilding industry that employs 6,000 direct-hire workers and contributing almost a billion peso annually to government from customs duties and taxes.

"We were falsely tagged as smugglers, but in reality the government is earning much of its revenues from the industry which has been gaining popular public support particularly from those who could not afford to buy brand new vehicles," Geroue said.

Geroue added that the EO violates substantive legal due process because of the recent Court of Appeals decision on the petition filed by MVIA which gave favorable interpretation on the existence of the second-hand vehicle trading inside the Freeport zone.

Geroue cited Republic Act 7227 or the Bases Conversion law which states that, "the Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the zone."

Geroue insisted that used vehicles are not contraband, as alluded by its detractors, and can be imported within the free port zone and can be disposed of even outside the zone as long as the proper taxes and customs duties are paid.

The MVIA pointed out that the Subic Bay Metropolitan Authority (SBMA), in close coordination with the Land Transportation Office (LTO), has accredited two vehicles testing centers inside the free port zone.

"All imported vehicles are subjected to rigid testing to meet the high quality standards on ‘roadworthiness and safety’ prior to its registration and issuance of vehicle plates," Geroue pointed out.

Thousands of skilled workers engaged in automotive rebuilding in Subic are in danger of losing their jobs as a result of the government’s hard stance and lack of sympathy for the imported second-hand vehicle trading business.

Workers such auto mechanics, electricians, car painters and alike appealed to the government to look for an alternative solution to prevent the dislocation of their families.