Dindo Manhit, President, Stratbase ADR Institute
We are certain that Malacañang had good intentions when it issued Executive Order (EO) 12 last month. The order details the tax breaks that will be enjoyed by imported electric vehicles (EV) for five full years beginning this year. It is congruent to the administration’s role in leading the people to adopt environment-friendly lifestyles.
Most of the electric vehicles covered by the order, with seeks to drive consumers away from transportation powered by fossil fuels toward cleaner alternatives, are four-wheel ones.
Thus, the order gives rise to questions about equity and inclusion. Who are the people who will benefit from the tax incentives? Aren’t they the more affluent Filipinos who can afford to buy new electric cars?
To be sure, early adopters of these four-wheel electric vehicles deserve the tax breaks. It is a commendable decision to let go of our old air polluting ways and opt to use cleaner alternatives with zero greenhouse gas emissions.
But they are not the only ones making the shift, or who want to make the shift.
Two-stroke motorcycles, for instance, are swarming the country’s urban and rural roadways. In the National Capital Region alone, where about 2.9 million vehicles are registered, almost half of this number — 1.4 million — are motorcycles. But motorcycles, just like all petroleum-burning vehicles, contribute significantly to air pollution because these are the preferred rides of the masses. Imagine the drastic drop in air pollution if millions of these two-wheel owners were to shift to electric motorcycles.
We can also look at the issue from a socioeconomic point of view. Two- and three-wheel vehicles are the modes of transportation used by Filipinos from the lower-income brackets. They can’t afford to buy four-wheel cars, and the cost and inconvenience posed by our problematic public transport system have driven them to choose what their limited buying power can afford. These modes of transportation are the most viable for them, and they use them to go to work and school, do personal errands and for livelihood such as the more than 20,000 transport network vehicle service riders serving the growing commuter and delivery demand. These motorcycles are work enablers for riding bread winners and their millions of dependents.
The zero import taxes of EO 12, though limited to five years, is a significant cost saving of 30%. This and the prospect of not having to pay for another liter of expensive imported fuel at the gas station are strong reasons to shift to electric vehicles, which are more cost-effective, efficient and converts the owner into an active planet saver. This is the kind of positive action we need from the government to push everybody to do their part in reducing carbon emissions.
EO 12 in its current form creates an impression that it is discriminatory, and that it favors the richer segments of society who can afford four-wheel cars, while disregarding the mobility needs of the working class.
We are certain this was simply a palace oversight and shouldn’t be hard, or even take long to rectify. A few clarificatory amendments are all that’s needed.
Foremost, all Filipinos — regardless of income bracket — are called to become responsible stewards of the environment. While we pursue growth and development, we must contemplate sustainability and how the world will be like for future generations. All of our actions, big and small alike, do matter.
We are all working hard to recover from the doldrums of the pandemic crisis — to again feel the excitement of a vibrant economy where wealth creation is an opportunity, not just for the privileged, but for anyone willing to work for their dreams of a prosperous life set in a clean and healthy environment.
When it comes to policy making, the Devil is always in the details. There is really no logic to exclude the most ubiquitous mode of transportation of the people that is a major source of air pollution.
The objectives of EO 12 are clear — “to reduce reliance on imported fuel,” “provide an enabling environment that permits the development of electric vehicles, including options for micro-mobility as an attractive and feasible mode of transportation” and “help boost the electric vehicle market in the country, support the transition to emerging technologies and encourage consumers to consider electric vehicles as a cleaner and greener transportation option.”
All these are laudable but with a careful reading, the succeeding provisions on four-wheel vehicles clearly indicate zero import tariff for five years, but when it comes to electric powered motorcycles it is blank and followed by “XXX” which according to Section 1 means that current tax rates “shall remain in full force and effect.”
Several groups are already calling for the president to amend his executive order that will only take a few tweaks to perfect. Sure, the Bureau of Customs can come up with a memorandum circular or Congress can legislate an amendment, but we all know how much time, energy and taxpayers’ money will have to be consumed for that route.
On this issue, expeditious action by the president would be best.
This article was originally published in BusinessWorld.