Trade and Industry Secretary Alfredo E. Pascual is seeking review of the excise tax exemption on double cab pickup trucks to limit this privilege to the real utility workhorse vehicle — the regular single-cab & chassis pickup — and not the fully accessorized double cab that is far from the reach and need of the micro, small and medium entrepreneurs (MSMEs).

Pascual issued this statement in support of the Department of Finance’s (DOF) position to remove the excise tax exemption on pickup trucks introduced under Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (Train) Law.

The DTI chief explained that the regular single-cab & chassis pickup — the real utility workhorse vehicle — has always been exempted from excise tax even before TRAIN. The TRAIN Law extended the exemption to the double-cab pick-up ostensibly to support the cargo mobility requirement of the MSME sector.

“However, it seems that the imported double-cab pickup is often a fully-accessorized passenger unit — a lifestyle vehicle far from the need and reach of MSMEs. Since the excise tax exemption applies to the whole vehicle, the double-cab pick-up accessories also get exempted from the excise tax,” Pascual said.

Both DOF and DTI had observed that pickup trucks are now being modified to serve for other purposes such as passenger cars, leisure, or sport utility vehicles. This has allowed manufacturers to circumvent the provision of the TRAIN law and purpose of the exemption.

At the recent House committee on ways and means hearing, Finance Secretary Benjamin E. Diokno batted for the inclusion of the pickup truck taxation in the previously called the Passive Income and Financial Intermediary Taxation Act (Pifita), which failed to pass during the Duterte administration.

While the previous administration tax package was revenue neutral, this time the DOF estimated additional tax collections reaching P52.6 billion from 2022 to 2026 with the removal of the excise tax exemption on pickup trucks.

Already, the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) has warned that removing the excise tax exemption on pickup trucks would definitely raise prices and dampen demand for this commercial vehicle category, the most preferred utility vehicle for MSMEs.

Sales of pickup trucks or light trucks in August this year jumped 29.9 percent to 461 units from 355 in August 2021. For the first eight months of the year, sales of pickup trucks grew 6.4 percent total a total of 3,274 units from 2,256 units in the same period last year.

Prices of imported pickup trucks range from P1 million to more than P3 million per unit.