E-vehicle makers want tax breaks until 2020

Posted on December 15, 2014

THE ELECTRIC VEHICLE Association of the Philippines (EVAP) is asking the government for an exemption from value-added tax (VAT) and excise tax until such time the industry is fully developed, which is expected by 2020.

EVAP President Rommel T. Juan said in a statement on Friday that “the local EV industry is not even where it should be vis -- a-vis its ASEAN neighbors; and the government will not lose anything if it implements these tax benefits compared to the gains forthcoming. Until such time when the industry is fully developed, then it would be the time when it would only be ready to pay full taxes.”

EVAP said that every hour, Philippine motor vehicles consume 2.029 million liters of gasoline and release 2,200 metric tons of carbon dioxide into the air, equating to P3,000 that the government needs to spend every 60 minutes to treat pollution-related diseases and to compensate for productivity losses.

“This contradicts the notion that the government will lose revenues from what we are asking because what EVs hope to replace right now are our old, ailing and polluting public transport vehicles such as the jeepneys and the tricycles,” Mr. Juan explained.

This comes on the heels of the group’s support for the implementation of the Alternative Fuels Vehicles (AFV) Bill.

In the 16th Congress, the AFV Bill was filed by Senator Ralph G. Recto with Senators Antonio F. Trillanes IV and Paolo Benigno A. Aquino IV filing two other versions.

In the House, various versions of the AFV Bill were filed by Congressmen Rufus B. Rodriguez (Cagayan de Oro, 2nd district), Mar-Len Abigail S. Binay (Makati City, 2nd district), Rodolfo G. Biazon (Muntinlupa City), and Mark A. Villar (Las Piñas City).

“We believe that an AFV Law that would grant both fiscal and non-fiscal incentives to investors in the EV industry is crucial to the long-term success of our local EV industry,” he added.

Other than the exemption from VAT and excise tax, EVAP is also asking for exemption from import duties and taxes.

EVAP said it plans to promote local manufacturing of electric vehicles and would like to have as much local value added in terms of labor, parts and components as much as possible.

“However, since many major parts of the EV such as the controller, motor, charger, converter, lithium ion batteries and battery management system are not yet available locally, then we propose that these be not subjected to import duties and taxes,” Mr. Juan said.

He added that his group proposes to also include in the exemption the parts common to regular vehicles that are also not available locally, such as axles, suspension systems, steering systems and many electrical parts.

“As an example, an e-Jeepney currently costs P750,000. But if you take out the taxes and duties, it will only cost P587,000. This 22% decrease in the selling price will benefit the EV manufacturer and ultimately trickle down to the operators and the jeepney riders,” Mr. Juan explained.

Mr. Juan added that for the hybrid Toyota Prius which is now priced at P2.25 million, excluding the excise tax and VAT brings the price down to P1.60 million or a 29% decrease in the selling price.

“Thus, taxi operators might consider using it as is now the case in other environment-friendly countries.”

EVAP has a target of one million EVs on the road by 2020. -- Chrisee Jalyssa V. Dela Paz