Higher excise tax not responsible for Honda plant closure: Palace

Presidential Spokesperson and Chief Presidential Legal Counsel Salvador Panelo said the increase in excise taxes is justified, as taxes are regularly increased anyway. (File photo: Office of the Presidential Spokesperson/Facebook)

MANILA — Malacañang on Monday dismissed claims that higher excise taxes on new vehicles prompted automobile maker Honda Cars Philippines Inc.’s (HCPI) to shut down its manufacturing operations in Laguna.

Presidential Spokesperson and Chief Presidential Legal Counsel Salvador Panelo said the increase in excise taxes is justified, as taxes are regularly increased anyway.

He said the company’s closure could mean that it was losing in terms of quality compared to other automobile makers.

“Ang sinasabi nila centered on cost-competitiveness of local operations. Parang natatalo sila sa labanan ng quality. Parang mas mura pa kung nag import sila. ‘Yan ang pinaka reason nila (What they are saying is centered on cost-competitiveness of local operators. It’s as if they are losing in terms of quality. It’s as if it would be cheaper if they import. That’s their main reason),” Panelo said in a Palace briefing.

As the closure of Honda’s operations is expected to affect 400 employees, Panelo assured that the government’s economic managers are studying the matter.

“Pinag-aralan na lahat ‘yan ng economic managers ‘yan kung anong magiging consequences (Our economic managers are studying the consequences of the closure),” he said.

Earlier, he said Honda personnel who will be left displaced can apply to the government through its infrastructure projects under the “Build, Build, Build” program.

“They have to look for another job. Kaya nga may mga ‘Build, Build, Build’ projects, para ‘yung ibang mga nadi-displace, makakapasok sila ng trabaho (That’s why we have ‘Build, Build, Build’ projects, so we can help those displaced workers to find a new job),” he said in an interview over dzIQ on Sunday.

The Duterte administration raised excise taxes on new vehicles and fuel by signing into law the Tax Reform for Acceleration and Inclusion (TRAIN) bill or Republic Act No. 10963 in December 2017.

Honda saw a 26.7 percent drop in volume sales in 2018 to 23,294 units, and then further dropping by nearly 13 percent to 20,338 units in 2019.

HCPI began the operations of its manufacturing plant in the Philippines in 1992.

On February 22, the automobile maker announced that it decided to halt operations to optimize efforts in the production operations in Asia and Oceania regions.

“To meet Honda’s customer needs in the Philippines for reasonably priced and good quality products, Honda considered efficient allocation and distribution of resources. As such, after consideration of optimization efforts in the production operations in Asia and Oceania region, Honda decided to close the manufacturing operations of HCPI,” the HCPI said in a statement.

Despite HCPI’s shut down, the production of Honda motorcycles will not be affected by the closure of the car plant in Laguna.