MANILA - The government's plan to raise taxes car purchases will not hurt efforts to revive the local auto manufacturing industry, Trade Secretary Ramon Lopez said Tuesday.

Higher duties will have a 3-percent "net effect" on car prices since taxes on vehicles below P1 million will be less compared to luxury cars, Lopez told reporters.

An accompanying reduction in personal income taxes is also expected to spur car sales even as prices would go up, he said.

The trade department is positioning the Philippines as a car assembly hub in Southeast Asia under the Comprehensive Automotive Resurgence Strategy Program.

During a visit to Japan last year, President Rodrigo Duterte secured commitments from Toyota Motor Corp. and Mitsubishi Motors to build subcompacts in the Philippines

• READ: Duterte Japan trip yields Toyota, Mitsubishi deals in $1.85-B package

The auto tax is part of a broader reform package, which also calls for duties on sugar-sweetened drinks to offset the reduction in personal income taxes.