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Palace to raise tariff on imported 2nd hand vehicles
Jeffrey O. Valisno, BusinessWorld (01 Mar 2005)

PHILIPPINES: '... if we lose [in court], I will simply raise tariffs because I have the power to do that.' -- President Gloria Macapagal-Arroyo

If the courts will strike down as illegal the government ban on the importation of used motor vehicles, then Malacañang will just make it difficult to bring them into the country by raising their taxes.

"In the end, if we lose [in court] I will simply raise tariffs because I have the power to do that," President Gloria Macapagal-Arroyo told reporters yesterday during the ground-breaking for the P1.3-billion motorcycle manufacturing plant of Honda Philippines, Inc. in Tanauan City, Batangas.

But the President did not say by how much tariffs would be raised. At present, a tariff of 30% of import value is levied on used vehicles that are imported and then brought out of freeport zones like Subic in Zambales.

However, Mrs. Arroyo vowed to make it difficult for imported used vehicles to enter the country, to protect local car assemblers and their workers.

Japan's Honda, aside from assembling motorcycles, also assembles cars in the country in joint venture with the Yuchengco and Zobel de Ayala families. Other Japanese carmakers with local assembly operations are Toyota, Nissan, Mitsubishi, Isuzu. Ford is the only American assembler in the country, although General Motors also sells cars locally.

Mrs. Arroyo made the pledge to protect their interest following the Court of Appeal's declaration last week that her Executive Order no. 156 was unconstitutional. That order banned the importation of used vehicles. The President said government lawyers would first file a motion for reconsideration, to reverse the court decision.

In a 31-page decision penned by Associate Justice Perlita J. Tria Tirona, the appellate court had said "there [was] no law granting the President of the Republic of the Philippines authority to prohibit the importation of used motor vehicles." The court had also said EO 156 "[had] no constitutional and statutory basis and [was] therefore invalid."

Press Secretary Ignacio R. Bunye had defended EO 156, issued by the President on December 12, 2002, by saying that the Arroyo administration had only wanted to help spur the development of the local car industry.

The EO effectively banned the importation of all types of used motor vehicles, except for vehicles owned and for personal use of returning residents, vehicles for the diplomatic corps; certain types of trucks and buses, and special purpose vehicles.

By invalidating EO 156, the appellate court had upheld the Olongapo City trial court decision in favor of the Motor Vehicle Importers Association of Subic Bay Freeport, Inc.

In its petition, the association had also asked the Subic Bay Metropolitan Authority to continue allowing the unimpeded entry and importation of used motor vehicles into the freeport.

In 2003, the trial court issued an injunction on the import ban. This prompted Malacañang to run to the appeals court.


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