Tax on pickups to yield P53B

- Advertisement -

The Department of Finance (DOF) and the Department of Trade and Industry (DTI), are proposing the removal of the excise exemption of pickup trucks saying that subjecting these vehicles to excise tax will result in an estimated additional revenue of P52.6 billion from 2022 to 2026.

In his letter to Albay Rep. Joey Salceda, Finance Secretary Benjamin Diokno proposed the inclusion of this measure in the DOF’s proposed package 4 bill or the Passive Income and Financial Intermediary Taxation Act (PIFITA).

“Together with the DTI, we propose the inclusion of a provision removing the excise tax exemption of pick-up trucks introduced under Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law. Pick-up trucks were granted the special tax treatment for their utility as workhorses for small business owners and professionals in their livelihood,” Diokno said in his letter that was read by Salceda during the House ways and means committee hearing yesterday.

- Advertisement -

“The DTI has observed that manufacturers modify pick-up trucks to serve as passenger, leisure or sports utility vehicles. This scheme allows manufacturers to circumvent the provision of the law and purpose of the exemption,” he added.

The House committee on ways and means approved Wednesday the unnumbered substitute bill to House Bills (HB) 375, 2111 and 3244 or the proposed package 4.

Diokno said with the amendments introduced in HB No. 375, the DOF-proposed package 4 draft bill will give the government an estimated incremental revenue of P18 billion in 2023 and P7.9 billion in 2024 before the collections taper off in the succeeding years.

“However, with the reforms introduced under Package 4 and the expected developments in the financial and capital markets, the bill can generate reliable revenue streams for the government in the long-term,” he added.

Diokno said PIFITA aims to make the taxation of passive income, financial intermediaries and financial transactions simpler, fairer, more efficient and regionally more competitive.

PIFITA was approved on third and final reading on Sept. 9, 2019. However, Diokno pointed out that further deliberations on package 4 were put on hold in the Senate at the onset of the pandemic.

“We thank your committee for supporting package 4 in the previous Congress and for sponsoring the same in the 19th Congress as HB No. 375. As the economy begins to recover from the effects of the pandemic, we must build the foundations for a rapid and robust recovery,” Diokno said to Salceda.

In line with this objective, the DOF resubmitted to the committee the enhanced DOF-proposed package 4 draft bill.

Aside from the inclusion of a provision removing the excise tax exemption of pickup trucks, Diokno said the package 4 bill includes a reduction in the number of tax rates on passive income and financial intermediaries; adoption and uniformity of a regionally competitive tax system; harmonization of business taxes on financial intermediaries; alignment of the tax treatment of life/health-related products; adoption of stock transaction tax on the disposition of domestic shares of stock listed and traded in both local stock exchange and foreign stock exchanges; rationalization of documentary stamp tax on financial transactions; clarification of collective investment schemes taxation; and the adoption of tax administration provisions to complete the tax reform proposals of the previous administration.

In a statement from the Lower House, it was also explained that package 4 would amend certain sections of the National Internal Revenue Code of 1997, as amended, to reduce the documentary stamp tax imposed on lotto tickets from P0.20 to P0.10.

Salceda said while this could cause revenue losses to the government, the measure would aid in ensuring that the Philippine Charity Sweepstakes Office’s revenue does not collapse due to skyrocketing ticket prices in the long run.

The panel also agreed to incorporate in the bill the proposed removal of excise tax exemption of pickup trucks introduced under TRAIN.

Likewise, the committee approved the unnumbered substitute bill to HBs 373, 2014, 2246 and 3888 or the proposed Philippine Mining Fiscal Regime Act.

Salceda said a mining regime with environment, social and governance compliance mechanisms would help companies access foreign capital and technology. – Angela Celis and Wendel Vigilia

Author

- Advertisement -

Share post: