Auto Industry: Which will Prevail: The DoF on HB 5636 (Tax Reform) or the Law of Demand?

In a section of their website, the Department of Finance published an infographic attempting to debunk supposed “tax myths”

 

A brief purview of the prevailing conditions of the domestic auto industry prior to the enactment of HB 5636:

First fact. Since culminating in July 2016, the growth of unit auto sales has substantially been slowing in conjunction with auto loans. The financing of car sales has mostly been through credit.

Second fact. Based on the Philippine Statistics Authority’s October manufacturing data, auto production grew at double-digit rates in 2016 until the 1H 2017 but suddenly contracted by -.6% and -4.7% in September and October, respectively.

So how will the DOF’s claim measure with the law of demand?

The law of demand as defined by investopedia.com is “a microeconomic law that states, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa. The law of demand says that the higher the price, the lower the quantity demanded, because consumers’ opportunity cost to acquire that good or service increases, and they must make more tradeoffs to acquire the more expensive product.” (bold added)

So…

Will politics successfully suspend the fundamental laws of economics (law of demand)? Or, will the DOF get shocked by the emergence of unintended consequences to the economy from the practice of the populist notion of “statistics equals economics”?