MANILA-- Finance Secretary Carlos Dominguez III said the local automotive industry will continue its “healthy” growth rate even with the proposed adjustments in car excise taxes.
Dominguez said this given that the manageable price hikes in mass-market vehicles would be readily absorbed by buyers who will, in effect, increase their take-home pay by way of substantially lower personal income taxes.
He said buyers will also hardly feel the effects of the price adjustments for mass market cars such as the Toyota Vios and the Mitsubishi Mirage from the proposed excise tax increase, because of the flexible financing schemes offered by car dealers that stretches to as long as seven years for some models, which will become even more affordable amid the country’s low interest-rate regime.
While there may be an initial slowdown in car sales, Dominguez said the industry would be able to quickly recover and continue its robust pace of growth as it did in the past two years, when car sales went up by 25 percent.
“We think that the sales will continue to grow at a healthy rate. With the increasing incomes of people, the drop in the income taxes, you know, [the car industry] can hit very well another 20 percent a year. So, I don't think this will kill the industry, it might slow down the sales, but the sales growth is still going to be very healthy,” said Dominguez at a hearing of the House ways and means committee on Package One of the Comprehensive Tax Reform Program (CTRP).
“When this package is passed, there will be a reduction in income taxes, so somebody earning half a million pesos (annually) will get to increase his purchasing power by about Php 27,000. At that time, he can decide: is he going to buy a car, will he put his kid in a better school?” Dominguez added.* PNA
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